How Interest is Calculated for SSA? Sukanya Samriddhi Yojana Interest Rate, Benefits, Eligibility and More

Sukanya Samriddhi Account

The Sukanya Samriddhi Account is a unique savings initiative to empower girl children in India. As a part of the Beti Bachao Beti Bachao campaign in 2015, Prime Minister Narendra Modi introduced the plan. This savings plan helps with the two main things, which are education and weddings. This is a special savings program where parents can save money for the bright future of their daughters.

The government started this idea back in December 2014, insisting that parents can open one of these accounts for their daughter at any post office and at certain banks like HDFC Bank, Axis Bank, or ICICI Bank. Since the plan started, 2.73 crore-worth of accounts have been opened all over India.

How Interest is Calculated for SSA?

The Sukanya Samriddhi Account is a savings account meant to empower girl children all over India. This account can be started as soon as the girl child is born and can be run until the girl turns 10. This savings plan serves two purposes: education or wedding. SSA gives you higher interest rates compared to other savings account types. As of now, it’s set at 8.2%, where the amount rises with the compound interest rate. 

Compound interest is something where the interest rate keeps varying with the current amount you hold. So, you’ll get to grow your money faster.

Example:

Let’s say you have a newborn baby girl and have decided to open an SSA account. First, as a principal amount, you deposit Rs. 10,000 into the account. As of now, the interest rate is 8.2% per year. Let’s illustrate an example:

Year 1:

Initial deposit: Rs. 10,000

Interest earned: Rs. 10,000 * 8.2% = Rs. 820

Total amount in the account at the end of Year 1: Rs. 10,000 + Rs. 820 = Rs. 10,820

Year 2:

Total amount from Year 1: Rs. 10,820

Interest earned: Rs. 10,820 * 8.2% = Rs. 887.24 (approximately)

Total amount in the account at the end of Year 2: Rs. 10,820 + Rs. 887.24 = Rs. 11,707.24

Year 3:

Total amount from Year 2: Rs. 11,707.24

Interest earned: Rs. 11,707.24 * 8.2% = Rs. 959.99 (approximately)

Total amount in the account at the end of Year 3: Rs. 11,707.24 + Rs. 959.99 = Rs. 12,667.23

Calculate SSA Interest

The formula used to calculate the related amount is:

A=P(1+r/n)^n

In this formula,

• A= Compound Interest
• P=Principal Amount
• r=Rate of Interest
• n=The number of times interest is compounded in a year
• t=number of years

Eligibility Criteria for Sukanya Samriddhi Account 

• The Sukanya Samriddhi Account can be opened for the girl child from a newborn baby until she turns 10 years old.
• Normally, a family can open only one Sukanya Samriddhi Account (SSA) for their daughter.
• Two girl children can only have these accounts in one family in the case of twins or triplets, but they need to provide more paperwork and a birth certificate. 
• If a family already has two or more girls from a previous birth, they can't open extra SSA accounts for the new baby girls from the second birth.
• Only one account per child is allowed.
• Maximum amount of contribution is Rs.1,50,000
• 21 years is the maturity period of the scheme

Requirements to Open Sukanya Samriddhi Account

The following points represent the required documents to open the Sukanya Samriddhi account:

• Birth certificate of the girl child.
• Government-identified proof.
• Residency Proof of the Family 
• Photocopies of the child and parents.

Benefits of Sukanya Samriddhi Account

The benefits of opening Sukanya Samriddhi Account are as follows:

• Compound interest
• High-interest rate
• Tax benefits of a maximum of Rs. 1.5 lakh under section 80C of the Income Tax Act (1961).
• Can be debited from anywhere in India.
• Interest is paid even if the account is not closed after maturity.
• Deposits can be made for a period of fifteen years from the date of opening the account.

Providers of Sukanya Samriddhi Yojana Account 

The Reserve Bank of India has approved the following banks as the providers of SSY:

1. Axis Bank
2. State Bank of India (SBI)
3. Central Bank of India (CBI)
4. Bank of Maharashtra (BOM)
5. Bank of India (BOI)
6. Bank of Baroda (BOB)
7. Punjab National Bank (PNB)
8. Union Bank of India
9. Vijaya Bank
10. Indian Overseas Bank (IOB)
11. Indian Bank
12. IDBI Bank
13. ICICI Bank
14. UCO Bank
15. Punjab & Sind Bank (PSB)
16. Dena Bank
17. Canara Bank