Sukanya Samriddhi vs Children Mutual Fund Last Updated : 21 Sep 2019

The Sukanya Samriddhi Yojana account is a savings scheme offered by the Indian Government to parents of a girl child for her future expenses. Children mutual funds are funds offered exclusively to children and they come with high interest rates.

Sukanya Samriddhi vs Children Mutual Fund

It is first essential to know and understand what are these two types of saving schemes are, before we move ahead to realize their differences.

(On 23 July 2018, the criteria for minimum annual deposit for the Sukanya Samriddhi Yojana account has been revised to Rs.250 from the earlier amount of Rs.1,000. Also the interest rate for the July-September quarter is 8.1%.)

What is Sukanya Samriddhi Yojana?

The Sukanya Samriddhi account was initiated by Prime Minister Narendra Modi with the intention for parents to be able to help save and hence be able to afford their girl child's education and marriage with financial independence, promising a great future. As of now, such an account can be opened in the post office or at certain banks in and around the country. The interest rate collected in this account as of 2015-2016 was 9.2% per annum whereas for the year 2014, the interest rate that was used for the account was 9.2% by the account holders. This type of account and savings product also come with maturity benefit.

What is Children Mutual Fund?

Children Mutual Fund are specially designed for child’s future with higher risk factor but higher interest rate allowing to have an extra edge when it comes to helping in beating the inflation to a good extent. These mutual funds are generally available for both the girl and boy child. Some funds offer special maturity benefits.

Children Mutual Fund V/s Sukanya Samriddhi Yojana

Here are the main advantages of children mutual funds over Sukanya Samriddhi Yojana:

  1. CMF can be opened in the name of a girl or boy child whereas Sukanya Samriddhi account can be opened only in the name of a girl child.
  2. A Sukanya Samriddhi account can be opened only once for a girl child whereas there are no limits as to how many accounts can be opened for the boy or girl child.
  3. The maximum age limit to be able to open a Sukanya Samriddhi account is only upto 10 years whereas for a CMF, the account can be opened in the name of the child upto the age of 18 years.
  4. For the documents required to open each of these accounts, the SSY requires the child’s birth certificate which is not necessary in a CMF.
  5. Despite the guaranteed interest rate of 8.1%, in SSY, perhaps the high interest rates which are also more risky can still beat inflation over the year.
  6. Partial withdrawals can be made for CMFs after 3 years of the mutual fund tenure has crossed but for Sukanya Samriddhi Yojana, a partial withdrawal can be made only after the girl child reaches the ages of 18 years, that too upt to 50% of the amount deposited.
  7. Many fund houses provide the account holders with the advantage of nominations, but SSY does not have that benefit or features.
  8. Some CMFs provide insurance cover, but no SSYs provide insurance cover.
  9. You can make the payments with Cash/Cheque/Demand Draft for SSY. But for CMFs you can also make payments with Cash/Cheque/Demand Draft/ECS/Credit Card/Debit Card.
  10. Most of the fund houses allow provided their child is also an NRI, but not in the case of SSY.
  11. Minimum deposit for a SSY is Rs. 1000 a year but the minimum deposit for CMFs starts from Rs. 500.
  12. Maximum deposit that can be made for SSY is Rs.1,50,000 but there are no limits for CMFs.
  13. No penalty is chargeable if payment is not made for a year but for SSY, a penalty of Rs. 50 is charged.

Here are the advantages of Sukanya Samriddhi Yojana over Children Mutual Fund:

  1. You are guaranteed tax benefit in Sukanya Samriddhi Yojana under the section 80C on contribution allowing no taxation on interest earned. This cannot be said in the case of children mutual fund as different policies about tax deduction based on the company you are picking the mutual fund from.
  2. You can apply for a SSY as soon as your girl child is born. This varies in the case of CMFs as some require the boy or girl to be a minimum of 3 months.
  3. You are guaranteed an interest rate of 9.2% per annum as of 2015-2016, fiscal year. But in the case of CMFs are subject to market risks hence it is based on how much the your funds are able to yield.
  4. SSY can be opened at Post offices and 28 authorized banks. CMFs are offered by both public and private financial institutions but not post offices.
  5. There is no risk factor involved when it comes to the maturity payment in SSY.
  6. You can withdraw the maturity any day after the girl turns 21 years of age but for CMF, the maturity benefit payout depends on the exit load.
  7. The SSY investment money is used For development of country such as infrastructure and others whereas the mutual funds money is invested in Equities, debt instruments, securitized debt and other instruments.
  8. There are no application fees charged on SSYs but children mutual funds may require some small application fees based on the bank or company you are buying it from.


It is not the number of advantages that counts to make this choice between the two savings instruments and instead is based on the risk and requirements of the parent and their willingness to take risk. SSY has no risks involved but for parents who would want to fight inflation, might find childre mutual funds more useful.

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