SSY is a government-run saving scheme for the girl child. It seeks to provide them with financial security. Roopal's daughter is eligible for an SSY account. The account must be opened before the child turns 10, with a minimum investment of Rs 1,000. Thereafter, she must invest a minimum of Rs 1,000 and a maximum of Rs 1.5 lakh (deduction available u/s 80C) annually. The money in the account can be fully withdrawn only after the girl turns 21. If the money is not withdrawn even after the girl turns 21, it will continue to earn interest.
Roopal seems to like PPF for three things—EEE tax benefit, long-term investment horizon and assured returns (notified by the Government of India), benchmarked to the prevailing market rates. All these benefits remain the same if she were to invest in SSY. However, this is where the similarities end. It is imperative that she is aware of the differences too before she makes a choice. While Roopal will be able to partially withdraw her PPF corpus from the seventh year, such partial withdrawals from SSY will be possible only after her daughter turns 18. Moreover, if she were to open the SSY account now, she would end up with an investment horizon that differs based on the age of the child, while the PPF would allow her to invest for 15 years, further extendable in blocks of 5 years. Having said that, there is a slight interest rate differential in favour of the SSY.