SSA : Let us gift our girl child INR 74 lakhs with no Credit or Default risk.

Little Girls with dreams, become a woman with Vision 

What is SSA? 

1. SSA stands for "Sukanya Samriddhi Account".
2. SSA is a savings scheme instituted by the Government of India.
3. SSA is a "Girl Child Prosperity" scheme and the principal purpose is to support higher education and marriage of a girl child.
4. Security of the investment and interest is guaranteed by the Central Government of India
5. This product is not only secure but also tax-deductible and the returns are fully exempt from tax.

Sounds impressive, let us get into the details:

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What are the primary features?

1. The scheme is established and backed by the Government of India
2. The returns are protected and guaranteed by the Government of India
3. Investment, interest and returns are all exempt from tax
4. This scheme receives the highest rate of interest among all government welfare project
5. In the case of higher education, partial withdrawal facility can be availed
6. Full withdrawal facility for the marriage of a girl child once she completes 18 years

How does this work?

1. SSA account can be opened in a public sector bank (SBI, PNB etc) or any Post Office in the name of the girl child
2. Once the account is opened, we can deposit funds (from Rs. 250 to Rs. 1.5 Lakhs) every year for the next 15 years. These funds will start to earn interest on a compounding basis from the 1st year of contribution as per the prevailing interest rate.
3. From 16th year to 21st year (that is 16th, 17th, 18th, 19th, 20th and 21st years), while you can no longer contribute to the account, it will continue to earn the above mentioned yearly compounded interest
4. Post completion of 21 years (from the date of account opening), the account will mature and the girl child can withdraw the entire amount. The account will be closed after maturity
5. If the girl child gets married before completion of 21 years from account opening, then the entire accumulated balance can be withdrawn

Some more details please:

1. Parents or legal guardian can open the account in the name of the girl child
2. SSA account can also be opened in the name of adopted girl child
3. Age of the girl child should not be more than 10 years at the time of account opening
4. We can open only one account for a girl child
5. If we are blessed with 2 girl child, we can open one account for each one of them

What are the documents required for opening the account?

1. Birth certificate of the girl child
2. Identity proof of the Parent or Guardian
3. Address proof of the Parent or Guardian
4. Most of the Public sector banks and all Post office will help you open account for your child

How much can I invest in this account?

1. The minimum investment amount is INR 250/- and the maximum amount in a financial year is INR 150,000/-
2. We can deposit money monthly, quarterly, half-yearly or once in a year.
3. We can deposit money only for the first 15years of account opening 

When can the money be withdrawn?

1. The life of the scheme is 21 years
2. This scheme stops accepting deposits from the 15th year of account opening
3. Interest is paid for the entire 21 years
4. On maturity, the entire balance, including interest, will be paid to the girl and the account will be closed

What is the interest offered for SSA?

1. At present, the annual Interest is 8.5%
2. This interest rate is not fixed and it will be announced by the Government from time to time.

When should I deposit money?

If you plan to deposit money monthly, please ensure to deposit it on or before 10th of every month.

The interest is paid on the balance from the 10th to the end of the month. whichever is lower

Example: 

You deposited INR 50000 in your SSA account on the 20th of August.

As per the rule, the system will check the balance from 10th August to month-end and interest will be paid for the lowest balance.

In our case, 10th August will have the lowest balance.

Here we lose the entire interest for INR 50000/- deposited this month.

Hence always deposit money between, 1st to 10th of the month. 

What amount can I expect on maturity?

Contribution from your side:

INR 22,50,000/-

Interest earned:

INR 52,46,265/-

Total Maturity amount:

INR 74,96,265/-

Assumption: GOI keeps paying interest @8.5%

What if my child intends to marry before the maturity? 

Firstly, Congratulations in advance, and the solution is simple, if your child intends to get married before the maturity of the scheme, request the bank or post office to close the account and pay the maturity amount.

This request can be made one month before marriage or three months after marriage

Account closure request should be supported with the age proof

What If I want to deposit money even after 15years?

Sorry, the government won’t take your deposit. If you insist, I will be happy to accept money as a gift 😅

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Intelligent Investor