Bajaj Finance FD or Sukanya Samriddhi Yojna: Which is better?

As updated by the Central Government in the previous quarter of 2019 (July – September), the Sukanya Samriddhi Yojana (SSY) comes with an interest rate of 8.4% per annum. Such rates are slightly higher than rates imposed on Bajaj Finance Fixed Deposits, which average at around 8.10%. 

Nonetheless, Sukanya Samriddhi Yojana aims explicitly to facilitate the education of the girl child, as a component of the ‘Beti Bachao Beti Padhao’ policy. 

Fixed deposits (FD), on the other hand, are investment tools with negligible risks and high and stable returns, aiming to boost aggregate savings of all individuals residing in the country. 

 Points of difference between Sukanya Samriddhi Yojana and fixed deposits – 

Objective

SSY scheme targets to boost the literacy rate as well as the standard of living of an average girl child in India by raising total funds available for education and other expenses such as marriage. 

Fixed deposits, on the other hand, aim to provide stability on total investment amount by minimising associated risk. It aims to increase the total wealth of individuals over time through high returns. 

Eligibility

An account under the Samriddhi Yojana can be opened by individuals having a daughter whose age is less than ten years. Such accounts can be created with stipulated financial institutions or post office, in the name of the girl child, respectively. An SSY account remains active until the girl child attains 21 years of age. Nonetheless, partial withdrawal is allowed in the event of upcoming hefty expenses such as higher education or marriage. 

Fixed deposits, on the other hand, can be opened by any resident Indian in the country. Only individuals below the age of 18 need to open such accounts through the name of their legally appointed guardian.

Number of accounts

Only one account can be opened for a girl child under the SSY scheme. A maximum of two accounts can be maintained by a family having two or more girl children. Individuals can maintain several fixed deposits in the name of one girl child, respectively. Hence, it is a popular investment option to secure your child’s future, as it comes with flexible tenor and multiple interest rates. 

Interest rates

Interest rates offered on the Sukanya Samriddhi scheme is fixed by the central government of India, keeping in mind the overall expenses of girl children. Fixed deposit interest rates, on the other hand, is subject to the respective financial institution. 

Major non-banking corporations also have provisions for interest rates for senior citizens. Such incremental rates help senior citizens retain their standard of living during times of fixed wealth and no income source. 

Senior citizens can invest in Bajaj Finance FDs to enjoy such high interest rate return benefits.  

Tax

SSY scheme allows investment starting from Rs. 250 till Rs. 1.5 Lakh per year. The entire amount invested is eligible for tax deductions under Section 80C. 

Tax rebate on fixed deposits, on the other hand, are restricted to deposits having a tenor of five years, respectively. Only the principal is exempted from such tax calculations. Fixed deposit interest rates earned through such instruments, on the other hand, are taxable. 

Nonetheless, provided total income through such fixed deposits are less than Rs. 40,000, individuals can enjoy tax waiver facilities by submitting Form 15G. Company FD, on the other hand, enjoys such tax exemptions if the total earnings are up to or lower than Rs. 5,000.

Withdrawal benefits

Even though fixed deposits come with a specified tenor, provisions for premature withdrawal are present. No extensive restrictions are imposed, and only a nominal charge is deducted from the total deposit on such cases. Such withdrawals can be made to meet any emergency requirement of owners.

Sukanya Samriddhi Yojana, on the other hand, has several restrictions on premature withdrawal. 50% of the total fund can be untimely withdrawn when a girl child attains 18 to meet any significant expenses such as higher education or marriage. 

Upon comparing both the policies, individuals can notice that the SSY scheme is associated with several restrictions, which do not apply to fixed deposits. Such limitations of the government-mandated scheme levy unnecessary burden on investors, in the form of restrictions on account management and withdrawal. Individuals opting for fixed deposits, on the other hand, enjoy the liberty to manage their funds as per their requirement at attractive fixed deposit interest rates. 

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