The flagship program of the government- Sukanya Samriddhi Yojana (SSY) is an ideal program for parents of the girl child under the age of 10 years. It is a unique scheme which allows small savings to accumulate in the form of a fixed deposit which has a relatively high-interest rate as announced by the Ministry of Finance every quarter.
Differences between SSY and FD:
Sukanya Samriddhi Yojana Account (SSY) is an investment option for a very specific purpose – higher education or marriage of your daughter. It cannot be utilized or withdrawn for any other purpose. Any Indian national can open but only those who have a daughter under the age of 10 years. However, a company FD like Bajaj Finance can be opened for any purpose and by any age group and gender. An FD can also give a nominee or beneficiary name for all practical purposes.
Bajaj Finance provides an easy online application option whereas SSY account has to be opened with either a bank or post office with the required paperwork. Only one SSY account can be opened in one child’s name and along with the rule of just one SSY account in one family. A company FD has no such restrictions or rules. Any number of accounts can be opened under your children’s name.
An SSY account requires a minimum deposit of Rs 250 whereas fixed deposits in banks can be opened with minimum Rs 100.
Also, there is no withdrawal rule in an FD, and you can even get a good loan against your company or bank FD. An SSY account will allow you to withdraw only 50% on the child reaching an age of 18 years.
There are various practical differences that make both instruments useful for different purposes.
Limitations in using SSY for financial goals
It is, however, not possible to know the exact return from SSY owing to the changes every quarter. If you want to plan for a specific amount after 14 years or once your daughter reaches 21 years of age, you might still fall short.
In place of this, an exact amount with a fixed interest rate over a tenor in a fixed deposit will help you plan your precise requirement. Going for company fixed deposits like Bajaj Finance FD with one of the highest safety ratings of FAAA/ stable by CRISIL and MAAA/stable by ICRA, will offer you guaranteed high returns on your investments.
Benefits of Bajaj Finance Child FD over Sukanya Samriddhi Yojana (SSY)
Lock-in period –
The lock-in period for Sukanya account is at least 21 years or at the time of marriage of the account holder, whichever is earlier. While the lock-in period of FDs can vary from 1 to 10 years, depending on the bank you are opening an account in.
Interest Rates –
Bajaj Finance offers 8.60% interest rate on Child FD that is slightly higher than compared to a Sukanya Samriddhi account
Also, the rate of interest is subject to periodic changes in the case of Sukanya Samriddhi, whereas a company FD like Bajaj Finance will offer attractive interest rates.
Any Indian Citizen can open an FD, irrespective of their age or gender. No age, gender, or tenor restrictions are applicable on Bajaj Finance FD. Whereas only girl child below the age of 10 years can be the beneficiaries of Sukanya Samriddhi Account.
Investment horizon –
FD can be used as a suitable short term as well as long term investment while the Sukanya Samriddhi scheme is only a long-term investment scheme.
Premature withdrawal –
Premature withdrawal is possible for Sukanya Samriddhi account but only up to 50% of the amount accumulated in the account. Early withdrawals of the whole amount can be possible in the case of Fixed Deposits.
Ease of investment –
Fixed Deposit with Bajaj Finance can be opened online whereas Sukanya account does not offer any such type of facility. Bajaj Finance also provides an online FD return calculator, similar to a senior citizen saving scheme calculator so you can know the exact maturity amount.
Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at HighlightStory