Public Provident Fund or PPF is the stronghold for retirement savings that a person does once they set out in their careers. Whereas Sukanya Samriddhi Yojana is a special small saving scheme under the “Beti Bachao, Beti Padhao” campaign of Government of India to give impetus to the advancement of girls in the country. Both schemes have different purposes though both are term deposits with long durations. Both are governed by the Small Savings Act enacted to manage the assets and funds under them and make decisions on the interest rates. Both the schemes get their interest rates reviewed and revised by the Finance Ministry each quarter based on the prevailing interest rates scenario.
Let us look at the differences and which is better and more useful in which case.
Public Provident Fund (PPF)
This is a scheme to inculcate a habit of saving in the general working population with an attraction of tax benefit up to Rs. 1.5 lakhs under Section 80 C. This can be opened at any bank or post office, and a maximum of 12 deposits are allowed in a year. It gives guaranteed returns and has a duration of 15 years. PPF account allows partial withdrawal from the 5th year of operation and also allows loan facility against the balance from its 3rd to 6th year of being in operation. Currently, PPF is earning an interest rate of 7.9% for October to December 2019.
The modes of operation and conditions have been designed to extend full support to a person in need. This account is free from any attachment in case of any court proceedings against the holder. Also, various withdrawals are allowed with specific conditions for specific purposes like renovation of house, purchase of house, medical emergency, marriage and such.
Sukanya Samriddhi Yojana (SSY)
Sukanya Samriddhi Account can be opened in the name of the girl child under the age of 10 years. Its maturity period is 18 years of age (till marriage) or 21 years of operation, whichever is earlier. The parent /guardian operates the account until the money can be transferred to the adult. It requires a minimum deposit of Rs. 250 till a maximum of Rs 1.5 lakhs. This amount is eligible for tax deduction under Section 80C of the Income Tax Act till the ceiling of Rs 1.5 lakhs. The interest rate earned on the account balance for the last quarter of 2019 will be 8.4%.
It’s a very useful deposit for meeting the needs of the girl child for major life goals such as higher education and marriage. Withdrawal for higher education – after 18 years of age – requires documentary evidence of exact expenses and confirmed admission for which the partial withdrawal is allowed. Maximum withdrawal allowed is 50% of the balance which was accumulated till the end of the preceding financial year.
Comparing the two one might get lured by the higher interest rate for Sukanya Samriddhi Yojana. However, you can easily understand that the withdrawal rules of Sukanya Samriddhi Scheme do not allow intermittent availability of liquidity. So Sukanya Samriddhi withdrawals will not help you in other financial goals. It is smartly designed to aid the girl child in her endeavor to be educated and lead a financially secure life. Whereas, the PPF is a perfect retirement fund with lifelong support, option for periodic withdrawals and scheme extension for five years.
Apart from these two investments to aid liquidity and be free of any withdrawal limits and rules, you can consider Bajaj Finance fixed deposits that offers higher interest rates and are equally stable. These deposits also give you the flexibility for premature withdrawal and loan against FD. You can also opt for periodic interest payouts to help you meet your regular expenses. Thus, you can benefit from easy liquidity and assured returns with Bajaj Finance FD.