- With no rate increases since January 2019, investors in the well-known small savings plans Public Provident Fund (PPF) and Sukanya Samriddhi Account (SSA) are unlikely to see higher returns any time soon.
- The last time the PPF and SSA rates were tweaked was when they were slashed sharply in April 2020 along with the returns on other small savings schemes.
- The interest rates of small savings schemes are linked to market yields of government securities in the secondary market.
- The central government reviews the interest of small saving schemes every quarter based on the government securities yield of the previous 3 months. This is based on the recommendations of the Shyamala Gopinath Committee 2011 to ensure the interest rate of small savings schemes is market linked.
Sukanya Samriddhi Account Scheme:
- The Government of India’s Sukanya Samriddhi Yojana is a small deposit programme that is designed specifically for girl children and was introduced as a part of the Beti Bachao Beti Padhao Campaign. The plan aims to cover a girl child’s costs for schooling and marriage.
- Launched in 2015.
- Minimum deposit ₹ 250/- Maximum deposit ₹ 1.5 Lakh in a financial year.
- An account can be opened in the name of a girl child till she attains the age of 10 years.
- Only one account can be opened in the name of a girl child.
- An SSY account can only be opened by a girl child’s parents or legal guardians.
- Only two SSY accounts can be opened by a family, i.e., one for each girl child.
- Sukanya Samriddhi Account can be opened for more than two girls in the below special cases:
- When a girl child is born before the birth of twin or triplet girls or if triplets are born at first, then a third account can be opened.
- When a girl child is born after the birth of twin or triplet girls, a third SSY account cannot be opened.
- An account can be opened in Post offices and in authorised banks.
- Withdrawal shall be allowed for the purpose of higher education of the Account holder to meet education expenses.
- The account can be prematurely closed in case of marriage of a girl child after her attaining the age of 18 years.
- The account can be transferred anywhere in India from one Post office/Bank to another.
- The account shall mature on completion of a period of 21 years from the date of opening of the account.
- Interest earned in the account is free from Income Tax under Section 10 of I.T.Act.
- Documents required for opening an account:
- Sukanya Samriddhi Account Opening Form
- Birth certificate of girl child
- Identity proof (as per RBI KYC guidelines)
- Residence proof (as per RBI KYC guidelines)
Public Provident Fund:
Because of its many qualities that are beneficial to investors and the perks that come with them, a public provident fund is a well-liked investment strategy. It is a long-term investing strategy that is well-liked by people who seek to generate substantial yet consistent returns. The main goal of those who open a PPF account is the proper safekeeping of the principal sum.
- Minimum deposit ₹ 500/- & Maximum deposit ₹ 1,50,000/- in a financial year.
- Withdrawal is permissible every year from the 7th financial year.
- Account matures on completion of fifteen complete financial years from the end of the year in which the account was opened.
- After maturity, the account can be extended for any number for a block of 5 years with further deposits.
- The account can be retained indefinitely without further deposit after maturity with the prevailing rate of interest.
- A loan facility is available from the 3rd financial year up to the 6th financial year.
- Interest earned in the account is free from Income Tax under Section -10 of I.T.Act.
- A PPF account can be opened in the name of an Indian citizen who resides in the nation. Minors may also open a Public Provident Fund account in their names as long as their parents are the ones who manage it.
- Non-residential Indians are not permitted to open a new PPF account. However, any existing account in their name remains active till the completion of tenure. These accounts cannot be extended for 5 years – a benefit available to Indian residents.