Sukanya Samriddhi vs Recurring Deposit Last Updated : 17 Oct 2019

The Sukanya Samriddhi Yojana scheme is a scheme that allows parents of girl children to save money for their future needs. A recurring deposit is a term deposit account that allows individuals to invest a small portion of their income regularly.

The Sukanya Samriddhi Yojana is a scheme that was launched with the main aim of securing a girl child’s future. A Recurring Deposit (RD) account is a modified version of a Fixed Deposit (FD) account, where money can be invested periodically rather than in a lump sum.

Features of Sukanya Samriddhi Yojana & Recurring Deposit accounts

Parameters Sukanya Samriddhi Yojana Recurring Deposit
Eligibility The parent or legal guardian can open an account on behalf of a girl child. However, the girl cannot be more than 10 years old. Any individual, irrespective of age and gender, can open an RD account. Non-Resident Indians (NRIs) are also allowed to open an RD account.
Where to Open An SSY account can be opened at banks and post offices. An RD account can be opened at post offices and banks. However, NRIs can open an RD account only at banks.
Number of Accounts A girl child can have only one account under her name. An individual can open more than one RD account under his/her name.
Aim of Scheme An SSY account is a long-term investment scheme with the main aim of securing a girl child’s future. RDs can be opened for short-term purposes such as buying expensive household items, small educational costs, buying a car, etc.
Tenure The tenure of an SSY scheme is 21 years. The tenure of an RD account ranges between 6 months and 10 years.
Minimum Investment Rs.250 Depending on the bank the minimum amount would vary. Currently, the minimum amount that must be deposited per month at ICICI Bank is Rs.500. However, the minimum amount that must be deposited in an RD account opened at State Bank of Indian (SBI) is Rs.100.
Maximum Investment Rs.1.5 lakh in a year No limit
Rate of Interest Currently, the rate of interest offered by the scheme is 8.4%. The interest is compounded on an annual basis. Depending on the tenure of the RD account, the interest rates would vary. The rate of interest offered by HDFC Bank ranges between 5.65% and 6.90%. However, ICICI Bank offers interest rates ranging between 5.5% and 6.90%. Most banks offer higher interest rates for senior citizens.
Calculation of Interest Compounded annually Compounded quarterly
Tax Benefits on Deposits Under Section 80C of the Income Tax Act, tax benefits of up to Rs.1.5 lakh can be availed for any contributions made towards the scheme. No tax benefits are provided.
Loans Against Account Loans cannot be taken against the account. Up to 90% of the balance that is available can be availed as a loan.
Penalty In case the minimum amount is not deposited, a Rs.50 fine is levied. Depending on the tenure, the penalty charges will vary. SBI charges Rs.1.50 in case the RD account comes with a maturity period of 5 years or less. The penalty is Rs.2.00 in case the maturity period of the RD is more than 5 years.
Tax Benefits on the Interest The interest that is generated from the contributions made towards the account is tax-free. The interest that is generated will be taxed. However, in case the account belongs to a minor, tax benefits of up to Rs.1,500 can be availed under Section 10 (32).
Tax Benefits on the Maturity Amount Tax-Free Taxable
Tax Deducted at Source (TDS) TDS will not be deducted. TDS will be deducted.
Premature Closure In case the account holder passes away, the account can be closed. However, the death certificate must be submitted. The account can also be closed after the completion of 5 years from the date the account was opened. However, closure is allowed only under compassionate grounds such as treatment of life-threatening diseases. Depending on the bank, the penalty that will be levied for pre-closure will vary.

FAQs

  1. Who governs the rate of interest of the SSY scheme?
  2. The rate of interest is governed from time to time by the Ministry of Finance.

  3. What are the documents that must be submitted to open an SSY account?
  4. The below-mentioned documents must be submitted to open an SSY account:

    • Account opening form
    • Know Your Customer (KYC) documents
    • Birth certificate of the girl child
    • Passport-size photograph of the parent or legal guardian
    • ID proof and residence proof of the parent or legal guardian
  5. How can individuals transfer funds to an SSY account?
  6. Funds can be transferred to an SSY account either by cash, cheque, demand draft, or by adding the account as a beneficiary.

  7. Is it possible to open an SSY account online?
  8. No, it is not possible to open an SSY account online. You must visit the bank branch or post office with the relevant documents to open an SSY account.

  9. Is it possible to open an RD account online?
  10. Yes, an RD account can be opened online.

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