Savings has indeed become a vital part of our lives and nobody is untouched by the same. However, there is a plethora of options available when it comes to investing for a better future of your near and dear ones; we will be focusing mainly on Sukanya Samriddhi Yojana and Recurring deposit in this article. You must have heard about both of them from your friends, relatives or acquaintances, enlisting the benefits of both.
Sukanya Samriddhi Yojana is a scheme launched by the Government of India that allows parents of a girl child to invest and save money for their bright future. On the other hand, a recurring deposit (RD) is a modified version of the legendary fixed deposit (FD) account, where you can invest in a particular interval of time rather than investing in a lump sum. In this article, we will take you through the over- view and major differences between both.
Sukanya Samriddhi Yojana – An Overview
Sukanya Samriddhi Yojana is one of the revolutionary measures taken by the Government of India for the education and financial freedom of a girl child. This government backed scheme helps parents to save substantial amount of money for the education and marriage of their girl child from the very beginning itself. Counted under the category of small saving scheme, it can be opened post offices and designated private and public banks in the form of a savings account naming after their baby girl.
Like other post office schemes, the interest rate is declared quarterly. The parent of a girl child can open an account in the name the girl, given that the girl is not more than 10 years old. Also, the child should be resident citizen of India. The account can be closed after 21 years. However, the premature closing is allowed once the girl completes 18 years, provided that the girl gets married. If you want to know about the maturity amount at the end of the tenure, you can use Sukanya Samriddhi Yojana calculator anytime.
Note: SSY account cannot be opened for more than two girl children in a single family.
Recurring Deposit
A recurring deposit is a kind of deposit scheme which allows you with the flexibility to invest a particular amount of your choice each month and keep a track of your savings easily. In other words, it is similar to fixed deposit structure in a monthly installment rather than investing a lump sum amount in one go.
Age and gender are not a constraint when it comes to opening an RD account. A person of any age and gender can open one and start investing. Initially, you might not get the significance of investing in an RD, but once you have summed up a handsome amount of money, it can really come handy when you need it for any emergency.
Just like the SSY calculator, if you want to know how much savings you will be having at the end of your tenure, you can use Recurring Deposit calculator or RD Calculator anytime.
Basic Differences between Sukanya Samriddhi Yojana and Recurring Deposit
Below, we have tabulated the basic differences between Sukanya Samriddhi Yojana and Recurring Deposit to provide you with a lucid explanation.
| Important Points | Sukanya Samriddhi Yojana | Recurring Deposit |
| Who is eligible? | The parent or legal guardian of the girl child can open an account on the child’s behalf. | Age and gender is not a constraint; anyone can open an RD account. In fact, Non Residential Indians (NRIs) are also allowed to open an RD account. |
| Where is it opened? | At banks and post offices. | An RD account can also be opened at banks and post offices. However, NRIs are limited to open an RD account only at banks |
| How many accounts can be opened? | Under SSY, only one account can be opened in the name of a girl child. | RD account can be opened in more than one banks and accounts in the same name of an individual. |
| Scheme Objective | The primary objective of the SSY scheme is to secure a girl child’s future by investing in this long-term investment plan | The purpose of an RD may vary from person to person. Be it buying some expensive furniture, other household items or even a car. |
| What’s the tenure? | SSY’s tenure is 21 years | The minimum tenure of an RD account is 6 years and the maximum is 10 years. |
| Minimum investment | The minimum investment for SSY is Rs. 250. | The minimum amount for a recurring deposit keeps varying depending on the bank you are opening an account in. For example, the minimum deposit ICICI bank asks every month is Rs.500, for State Bank of India, it is Rs 200. |
| Maximum Investment | No | No Limit |
| Can loan against your account? | No | Opto 90& of the balance |
| Penalty | A fine of Rs 50 will be levied if the minimum amount is not deposited on time. | The penalty charges depends on the tenure. |
| Interest: Tax Benefits | The interest generated from contributions is tax free. | The interest generated is taxed. However, if a minor holds the account, tax benefits up to ts.1500 can be availed under Section 10(32). |
| Maturity Amount: Tax Benefits | Tax-Free | Taxable |
| TDS Deduction | Will not be deducted | Will be deducted |
| Premature closure | The account can be closed if the holder passes away by providing the death certificate. | The penalty for a Pre closure will vary depending on the bank |
Conclusion
Planning for your baby girl is no longer an uphill battle with schemes like Sukanya Samriddhi Yojana. As this scheme comes with great return on investment and tax benefits, it’s an appropriate scheme and best fit for your girl child. On the other hand, Recurring deposit comes to the rescue when you are unable to invest a lumpsum amount of money in a fixed deposit. The small amounts invested in RDs can be utilized when you are running out of money and need a lumpsum money for some purpose. However, it’s your money and you should scrutinize each and everything related to the investment meticulously before proceeding with anything.
