The Sukanya Samriddhi Yojana (SSY) is a government-backed small savings scheme designed to help parents build a corpus for their daughter’s future. It currently offers a competitive interest rate of 8.1%, which is the highest among small savings schemes. It also comes with tax benefits, which is why it remains a popular investment option for people.
Since the account has a lock-in period of 21 years (premature and partial withdrawal allowed), account holders may sometimes need to shift their SSY account to another bank due to relocation, better service, or convenience. The good news is that government allows transfer of SSY accounts between authorised banks and post offices without affecting the account’s benefits.
How to transfer SSY account from one bank to another?
If you are in a situation, where you need to transfer your SSY account from one bank to another, just follow these steps:
Step 1: Submit your transfer request to the bank where you currently have your account. Fill the request application (Form-5) at your respective bank and write a transfer request letter to raise your issue.
Step 2: In the transfer request form, provide all the required details of the new bank where you would like to get the account transferred. Write down the contact details and address of the new bank branch.
Step 3: Once the transfer request is submitted, the bank will send the original documents of your account to the new bank branch. If you have already made your investment in the old account, the bank is liable to send the cheque or DD of the amount to the new bank branch.
Step 4: Once the new branch receives your detail, you will have to submit a new SSY account opening form along with the KYC documents.
Step 5: After the submission of the documents, a new SSY account will be opened at the new bank with the entire principle amount and accumulated interest.
The balance in the SSY can be transferred anywhere in India. It can be moved across post offices and banks free of cost, but you need to furnish proof of a change of residence of either the guardian or the girl child.
Under any other circumstance, such a transfer can be made by paying a fee of ₹100, according to ClearTax.
Key things to know about SSY
This scheme can only be opened by a parent or a legal guardian of a girl child whose age is below 10 years. They can start by investing a minimum of ₹250 per year up to a maximum investment of ₹1.5 lakh annually. Here are some key things to know about the scheme:
- Maturity period: The SSY account matures after 21 years from the date of opening or upon the marriage of the girl child after she attains 18 years of age, subject to prescribed conditions.
- Premature closure of SSY account: Premature closure is permitted in specific circumstances, such as the death of the account holder, if they are suffering from a life-threatening illness or death of the guardian.
- Pre-maturity withdrawal rules: An account holder is allowed to withdraw 50% of the account balance as of the previous financial year’s end, However, this proceeds can only be used for educational or marriage expenses. This withdrawal is allowed only when the child has crossed 18 years or passed 10th standard, whichever is earlier.
- Tax Benefits: The scheme enjoys (Exempt-Exempt-Exempt) tax status. Contributions qualify for a deduction of up to ₹1.5 lakh per financial year under Section 80C, while the interest earned yearly and maturity proceeds are completely tax-free upon withdrawal.
Parents or guardians must also note that once the girl child turns 18, the account’s operation should be transferred to her, as she is permitted to manage it on her own, according to. You can make deposits for 15 years and no further deposits are required. Your entire accumulated corpus continues to earn the prevailing guaranteed interest rate for the remaining years.