Recently, Sukanya Samriddhi Account Rules 2016 were announced by Government of India, Ministry of Finance (Department of Economic Affairs) vide notification dated 18th March 2016.
The Purpose of this notification was to lie down or explain the Rules associated with Sukanya Samriddhi account, which was earlier omitted or not explained in detail when the product was launched. This explains the rules where the first notification was silent on when the account was launched. It may also be seen at as some modification or improvement into the product itself.
A detailed article on Sukanya Samriddhi Account has already been written on this blog, so this article should be read along with the earlier one to have more clarity on the product. I will be covering only the major points announced in the new rules.
Sukanya Samriddhi Account – Rules 2016
1. The total deposit in one financial year in Sukanya Samriddhi Account cannot exceed Rs 150000. It is further clarified that if due to some accounting/human error, deposit gets accepted over and above Rs 1.50 lakh then the excess amount will not be eligible for any interest.
Also, the excess amount may be withdrawn by depositor anytime.
2. Deposits can be made till the completion of 15 years from the date of opening of the account. Earlier the period was 14 years.
3. If for any reason required MINIMUM AMOUNT i.e. Rs 1000, do not get deposited in a Sukanya samriddhi account in a financial year, then the account would be termed as an account in default.
This account can be regularized on payment of Rs 50 as a penalty for a number of years the account remained in default, along with the minimum contributions required in those particular years.
If Sukanya Samriddhi account remained in default for 15 years from the opening of the account, then the account balance, before the account got into default would earn the rate of interest equals to Post office savings bank interest rate applicable at the time of maturity.
4. Now you can make an online deposit in Sukanya Samriddhi account, provided your Post office or bank where the account is, has the facility of CBS (Core banking solutions platform). I am not sure about Post offices, but I believe all banks do have such electronic platform which connects all branches electronically with each other.
5. Interest on Sukanya Samriddhi Account will be calculated on the lowest balance in the account between the close of the 10th day and end of the month. This makes the point that to earn more in Sukanya account you should deposit before 10th of every month.
This is another feature where Sukanya samriddhi differs from PPF, as in PPF the interest gets calculated on the lowest balance between 5th and end of the month.
6. NRIs can’t have Sukanya samriddhi account. If after the opening of the account, account holder becomes NonResident Indian then the respective Bank or Post office needs to be informed within a month of change of Residential status. The Sukanya account would be deemed closed and would not earn any interest after that, and will get prematurely closed.
7. Premature closure of Sukanya Samriddhi Account is permitted in the case of Death of beneficiary account holder and in the case of account holder suffering from life-threatening disease and finding difficulty in maintaining the account.
In the latter case, completion of 5 years of account is mandatory.
8. If you don’t want to maintain passbook, then now you can maintain Sukanya Samriddhi Account Records in Electronic form, provided your Bank or Post office where you operate your account has access to CBS facility.
9. A detailed explanation of Partial withdrawal provisions has been given in the Sukanya Samriddhi Account Rules 2016.
50% of the balance at the end of preceding financial year can be withdrawn for the purpose of higher education of account holder. Provided account holder attains the age of 18 years or passed 10th standard, whichever is earlier.
Application of withdrawal should be accompanied by a documentary proof that account holder has got confirmed admission in the educational institute.
Withdrawal may be made in lump sum or in Installments (Only 1 per year) for a maximum of 5 years. Provided that the amount of withdrawal be restricted to the actual fee amount demanded by the educational Institute and as per the proof submitted along with the application for withdrawal.
10. Sukanya samriddhi account shall mature on completion of 21 years from the date of opening of the account. However, there’s one more premature closure provision attached to it.
The account can be closed prematurely for the reason of “Intended marriage” of the account holder, with the condition that account holder should not be of lesser than 18 years of age on the date of marriage.
No Such Premature closure is allowed before one month proceeding to the date of marriage or after 3 months from the date of marriage.
Sukanya samriddhi account is a good product, especially for those who look out for safe and secure investment for their daughters. Interest rates wise it is better than PPF and structure wise government has made sure that it should be used only for the benefit of Girl child. Sukanya Samriddhi Rules 2016 has clarified many doubts associated with this product.
But after the announcement of Quarterly revision of Interest rates in small saving scheme, I believe that one cannot remain dependent on such products for the achievement of long-term goals. One needs to be actively involved in investment planning and should make use of other instruments like Equity, GILT, Corporate bonds etc. so the overall return in the portfolio should be in the acceptable range.
It also depends on the quantum of surplus you have for your goals. More the surplus more can be allocated to safe instruments. But Limited money should have to be used with a proper plan in the place.