The newly launched investment scheme by government for the betterment of girl child is Sukanya Samriddhi Account (SSA) This scheme is quite comparable to Public Provident Fund (PPF) account an already running investment scheme by government. No doubt both the schemes yield best rate of interest in market, yet there are many differences in both and have their own advantages and disadvantages.
Financial analysts have different views about both the schemes. Now let’s compare both the schemes on basis of some parameters.
Eligibility: The Sukanya Samriddhi account can be opened in the name of girl child only whose age is 10 years or below. Parents are allowed to open only 2 Sukanya Samriddhi accounts for their girl child, if they have more girl child they cannot open more accounts. While PPF account can be opened in any number and in name of any family member even the male child of family or parents.
Liquidity: PPF account provide more liquidity as it can be partially withdrawn after 7 years, while in Sukanya funds cannot be withdrawn before 21 years of age of girl, only 50% withdrawal is permitted that is only at 18 years of age of girl child. PPF account matures in 15 years also one can invest PPF account if he/she wish to. This investment period can be extended to 5 year lock in period.
Annual Interest rate: The rate of interest is not fixed for both Sukanya and PPF. But according to current scenario Sukanya is the winner in this case as the annual rate of interest for 2015-15 of SSY is 9.2% but in previous Financial Year i.e. 2014-15, rate of interest was 9.1% per annum. But in case of PPF, currently the rate of interest is 8.7% as per revised calculation by Govt. in 2015. Both Rate of interest of SSY and PPF are linked up to 10 years Govt. Bond Yield. Rate of interest in Sukanya Samriddhi is 0.75% higher than Govt. Bond Yield and Rate of interest is 0.25% higher than Govt. Bond Yield.
Installment amount: For Sukanya Samriddhi Account (SSA) installment amount is minimum INR 1000/- and maximum INR 1, 50, 000/- per year. For PPF Account minimum installment amount is INR 500 and maximum amount is INR 1, 50, 000/- per year. For both the schemes all installment amounts should be multiplied by 100. This investment can be made once or every month.
Investment Duration: For SSY Account, the fixed investment period is up to 14 years from the opening date of Account. But in case of PPF Account, the investment period is 15 years from the opening of Account.
Premature Closure: For Sukanya Samriddhi, if guardian or parents are unable to pay installments or the death of girl will occur, then the account will be terminated with premature amount. For PPF, on death of Account holder, the premature amount will be paid.
Loan Facilities: In Sukanya Samriddhi Yojana, No loan facility is available. In PPF, Loans are available after 3rd year of opening of PPF account.
Tax benefits: In both savings Account plans, Tax exemption up to Rs. 1.5 lakh is allowed under Section 80C. Both the schemes have tax free withdrawal.
To decide between SSA and PPF will surely depend on needs of the person. If person needs higher interest rates then he/she should surely opt for SSA while of liquidity matters most then PPF is the only option. SSA is always advised if the investor can comfortably keep his money for lock in period.