A better alternative to ppf for girl child

Hi

 

 

The Sukanya Samriddhi (SS) scheme of saving that has been introduced by the government of India is a great alternative or maybe actually a better alternative to the ppf for parents who are wanting to create a fund and save for their girl children.

The SS scheme has the following benefits over and above the ppf

 

1. The rate of interest is going to be higher than that of the ppf.  For this year it is 9.1% while the ppf is around 8.7%. The below graphic shows that if you have a child of 9 years the additional money that she will receive will be 1,11,000 at the age of 21!

 

SS Scheme
age	fund amount	Investment	Rate of Interest	total
9	0	150000	9.1	163650
10	163650	150000	9.1	342192
11	342192	150000	9.1	536982
12	536982	150000	9.1	749497
13	749497	150000	9.1	981351
14	981351	150000	9.1	1234304
15	1234304	150000	9.1	1510276
16	1510276	150000	9.1	1811361
17	1811361	150000	9.1	2139845
18	2139845	150000	9.1	2498221
19	2498221	150000	9.1	2889209
20	2889209	150000	9.1	3315777
21	3315777	150000	9.1	3781162

 

 

PPF
age	fund amount	Investment	Rate of Interest	total
9	0	150000	8.7	163050
10	163050	150000	8.7	340285
11	340285	150000	8.7	532940
12	532940	150000	8.7	742356
13	742356	150000	8.7	969991
14	969991	150000	8.7	1217430
15	1217430	150000	8.7	1486397
16	1486397	150000	8.7	1778763
17	1778763	150000	8.7	2096565
18	2096565	150000	8.7	2442017
19	2442017	150000	8.7	2817522
20	2817522	150000	8.7	3225697
21	3225697	150000	8.7	3669382

 

 

 

2. The interest has been clarified to be tax free.  So when the proceeds mature the child will not need to pay any tax.  ( this was not clear as the scheme was announced in January)

 

3. The money can be taken out when the child is 21 years old.  However even if at that time the child doesn't take out the proceeds, the amount will continue to get the interest.

 

4. The min amount to be deposited is
Rs100.  Hence small deposits can also be done.

 

5. Each girl child Can have only one account

6. One can put in an amount from 1000 to Rs 1,50,000 a year

 

The scheme is only available for girl children who are ten years old or lower.

 

There are a list of banks that will accept these deposits as below. 

1) State Bank of India
2) Bank of Baroda
3) Punjab National Bank
4) Bank of India
5) Canara Bank
6) UCO Bank
7) United Bank
8) Andhra Bank
9) Allahabad bank
10) Indian Bank
11) Corporation Bank
12) Central bank of India
13) IDBI Bank
14) Dena Bank

If you have a girl child,  this saving instrument should take precedence over other saving instruments in your debt portfolio .  Once this limit is breached you can try and use the ppf as the next instrument in the order of priority

 

 

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