Context: Investors in the popular small saving schemes Public Provident Fund (PPF) and Sukanya Samriddhi Account (SSA), whose rates have not been hiked since January 2019, are unlikely to get higher returns anytime soon.
This is because the government is no longer in complete agreement with the Shyamala Gopinath Committee formula adopted in April 2016 to reset small savings interest rates every quarter in line with the prevailing yields on government bonds of comparable tenures.
Sukanya Samriddhi Account Scheme
- What: It is a small saving scheme for the girl child launched under Beti Bachao Beti Padao.
- When: launched on 22 January 2015 in Panipat, Haryana by Prime Minister Narendra Modi.
- Administered under: Ministry of Finance
- Objective: aimed at the betterment of the girl child in the country by abolishing sex determination, gender discrimination, protection of girls, and higher participation of girls in education and other fields.
- Basic provisions of the scheme:
- Minimum deposit ₹ 250/- Maximum deposit ₹ 1.5 Lakh in a financial year.
- Account can be opened in the name of a girl child till she attains the age of 10 years.
- Only one account can be opened in the name of a girl child.
- Account can be opened in Post offices and in authorised banks.
- Withdrawal shall be allowed for the purpose of higher education of the Account holder to meet education expenses.
- The account can be prematurely closed in case of marriage of girl child after her attaining the age of 18 years.
- The account can be transferred anywhere in India from one Post office/Bank to another.
- The account shall mature on completion of a period of 21 years from the date of opening of account.
- The rate of interest is decided by the government and is determined on a quarterly basis.
- Peripheral benefits of the scheme:
- Deposit qualifies for deduction under Sec.80-C of Income Tax Act.
- Interest earned in the account is free from Income Tax under Section -10 of Income Tax Act.
Suggestions of Shyamala Gopinath Committee
The committee had suggested that the interest rates of different schemes should be 25bps-100bps higher than the yields of the government bonds of similar maturity.
Source: The Hindu & PIB