Now Reading: Child FD schemes compared: PNB, YES Bank, post office options
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Child FD schemes compared: PNB, YES Bank, post office options
Parents looking to save for their children have multiple fixed deposit and small savings options, each with different interest rates and rules. PNB's Balika Shiksha Yojana deposits Rs 3,000 from the government for eligible girls who have passed Class 8 from Kasturba Gandhi Balika Vidyalaya or are SC/ST students entering Class 9 in a government school. The account matures when the girl turns 18, and she must pass Class 10 and study for at least two years after Class 9.
YES Bank's child FD offers up to 8% interest for 18-month tenures on deposits below Rs 2 crore, with premature withdrawal and auto-renewal options. The Sukanya Samriddhi Yojana, for girls under 10, pays 8.2% interest with a yearly deposit limit of Rs 250 to Rs 1.5 lakh, and tax benefits under Section 80C. PPF offers 7.1% interest over 15 years, with partial withdrawal allowed after seven years and tax-free returns.
NSC provides a five-year fixed return of 7.7% with Section 80C tax benefits. Post office RD allows monthly savings from Rs 100 for five years at 6.7% interest, while time deposits offer 6.9% to 7.5% for one to five years. Parents are advised to consider not just interest rates but also liquidity needs and scheme rules before choosing.
Indian Opinion Analysis
The choice between these schemes hinges on the child's age and the parent's time horizon. Sukanya Samriddhi Yojana is limited to one girl child and locks funds until she turns 21, making it suitable for long-term education or marriage goals. PPF offers more flexibility with partial withdrawals after seven years but has a lower rate. Post office RD and NSC are better for shorter, fixed-term needs. The real comparison is between post-tax returns: PPF and SSY are tax-free, while bank FD interest is taxable for those in higher brackets. For a parent in the 30% tax slab, a bank FD yielding 8% effectively returns about 5.6% after tax, making the tax-free 8.2% from SSY significantly more attractive. The next date to watch is the quarterly small savings rate revision, typically announced in March, June, September, and December.
Source: bazaar.businesstoday.in
This story was synthesised by AI from the source linked above. Methodology and corrections.
