SUKANYA SAMRIDDHI ACCOUNT RULES, 2016 – AN OVERVIEW

The Government Savings Banks Act, 1873 is an act dealing with the Government Savings Banks. Section 15 of the said Act gives powers to the Central Government to make rules for the purposes of carrying out the provisions of the said Act. The Government of India framed ‘Sukanya Samridhi Account Rules, 2014 by exercising its powers under Section 15 of the Government Savings Bank Act, 1873. This rules are superseded by a new Rule framed by the Government of India called as ‘Sukanya Samriddhi Account Rules, 2016 vide Notification No.G.S.R. No. 323(E), dated 18.03.2016. These Rules came into effect from 18.03.2016.

These rules provide for opening an account in the name of girl child who is a resident India citizen at the time of opening the account and remains so till the maturity or closure of the account.

Procedure for opening of account

Rule 4 provides the procedure of opening of account.

The account may be opened by the guardian in the name of a beneficiary who has not attained the age of 10 years as on the date of opening of the account;
These rules shall not affect a beneficiary born on or after 02.12.2003, whose account was opened on or before 02.12.2015;
Every beneficiary shall have a single account;
An application for opening of an account shall be accompanied with the birth certificate of the beneficiary along with other documents relating to the identity and residence proof of the guardian;
The application shall be submitted to thePost office or the bank;
An account shall be opened for a maximum of two girl children in one family.Where more than two accounts may be opened for girl children in a family if such children are born in the first and/or in the second order of birth, on production of a certificate to this effect and from the competent medical authority regarding the birth of such multiple girl children in the first two orders of birth in a family; this shall not apply to girl children of the second order of birth if the first of birth in a particular family results in two or more surviving girl children.
The account shall be operated by the guardian till the beneficiary obtains the age of 10 years or till the beneficiary account holder attains the age of 18 years. The account shall be operated by the beneficiary account holder after such account holder attains the age of 18 years. The account may be operated by the beneficiary account holder after such account holder attains of 18 years.

Deposits

The minimum deposit amount is ₹ 1000/-. After that any amount in multiples of ₹ 100/- may be deposited in an account. A minimum of ₹ 1000/- shall be made as deposit in a financial year in one account. The total money deposited shall not exceed ₹ 1,50,000/- in a financial year. The deposits in excess of ₹ 1,50,000/-, if accepted due to any accounting error, shall not be eligible for any interest. The depositor may withdraw such excess amount from the account at any time. The deposits may be made till the completion of a period of 15 years from the date of opening of such account.

An account in which minimum amount of ₹ 1000/- has not been deposited it shall be treated as an account under default. Such accounts may be regularized on payment of penalty of ₹ 50/- per day along with such minimum specified amount for the year or years of default. If the default is not regularized within 15 years, then the whole deposits shall be eligible only for interest rate prescribed for Post Office Savings Bank at the time of maturity and any amount credited wrongly by way of interest shall be reverted to the Government account as soon as it comes to the notice of the bank or the post office concerned. If the default is due to the death of the guardian of the account holder the account shall be eligible for interest.

The deposit may be made by the guardian by cash or by cheque or demand draft or through e-transfer. The date of credit of the deposit to the account shall be determined as under-

Where the deposit is made by cheque, the date of encashment of the cheque;
Where the deposit is made by demand draft, the date of submission of the draft;
Where the deposit is made by e-transfer, the date of deposit.
The interest for the deposit shall be compounded yearly at the rate notified by the Government from time to time. The interest shall be credited to the account at the end of the financial year. The interest shall be rounded off to the nearest rupee. The interest shall be calculated for the calendar month on the lowest balance in an account on the deposits made between the close of the 10th day and the end of the month.

Pass book

On opening an account, the guardian shall be given pass book containing all details. A duplicate pass book may be subsequently issued in the event of loss, mutilation etc., of the original passbook, on the written request of the guardian or the account holder, on payment of ₹ 50/- towards fee for the same. The guardian shall have the option to maintain the records exclusively in electronic form, provided the bank of post office concerned has access to the facility of core banking business.

Withdrawal

The withdrawal of upto a maximum of 50% of the balance in the account at the end of the financial year preceding the year of application for withdrawal, shall be allowed for the purpose of higher education of the account holder. Such withdrawal shall not be allowed unless the account holder attains the age of 18 years or has passed 10th standard, whichever is earlier.

The application for the withdrawal shall be accompanied by a documentary proof in the form of a confirmed offer of admission of the account holder in an educational institution or a fee-slip from such institution clarifying such financial requirement. The withdrawal may be as one lump sum or in installments, not exceeding one per year, for a maximum of 5 years subject to the ceiling prescribed. The amount of withdrawal shall be restricted to the actual demand of fee and other charges required at the time of admission or the relevant fee-slip issued by the educational institution.

Transfer of account

The account may be transferred anywhere in India and from or to post offices and from or to banks and between post office and bank, free of cost on furnishing of proof of shifting of residence of either the guardian or the account holder or on a payment of ₹ 100/- to the post office or the Bank to which the transfer is made. The process of transfer shall be effected electronically if the post office or the bank concerned, has access to the facility of core banking business.

Premature closure

In the event of death of beneficiary the account shall be closed immediately on production of death certificate. The balance at credit of the account and the credit due till the date of death shall be paid to the guardian. If the account holder becomes a non citizen or non resident of India, intimation shall be given by the guardian or account holder within a period of one month from the date of such status of the account holder’s citizenship or resident status. No interest shall be deemed to accrue to the account from the change of such status and the account shall be deemed to be closed prematurely from that date. Such interest shall be reverted to the Government.

Where the post office or the bank is satisfied in case of extreme compassionate grounds such as medical support in life threatening diseases of the account holder or the death of the guardian, that the operation or continuation of such account will cause undue hardship to the account holder, it may, after complete documentation allow premature closure of the account. No premature closure of account shall be made before completion of five years of opening. The premature closure may be permitted for any reason other than the reason discussed in this para and in which case the whole deposit shall be eligible only for the interest rate prescribed for the post office savings bank.

Closure on maturity

The account shall mature on completion of a period of 21 years from the date of opening. The final closure may be permitted before completion of 21 years, if the account holder makes a request for such premature closure for reasons of intended marriages of the account holder and on furnishing of age proof confirming that the applicant will not be less than18 years of age on the date of marriage. No such premature closure shall be made before one month preceding the date of marriage or after 3 months from the date of marriage.

On maturity the balance including interest outstanding in the account shall be payable to the account holder, or an application by the account holder for closure of the account and on furnishing documentary proof of her identity, residence and citizenship. No interest shall be payable once the account completes 21 years from the date of opening.

Power to relax

Where the Government is satisfied that the operation of any of the provisions causes undue hardship to the account holder, it may, by order and for reasons to be recorded in writing, relax the requirement of that provision or provisions in respect of such account holder, in a manner not inconsistent with the other provisions of these rules.

Comments

This scheme is considered as the security given to the girl’s future. The scheme offers a healthy rate of interest and comes with a noble intent to avoid making girl child financial burden on parents and guardians in respect of the higher education or marriage of the girl. Section 10(11A) of the Act gives exemption to the contribution made to this scheme. This section provides that any payment from an account, opened in accordance with the Sukanya Samriddhi Account Rules, 2014 made under the Government Savings Bank Act, 1873. However the following are considered as drawbacks of this scheme-

No fixed rate of interest;
Premature withdrawal is not allowed;
Lock in period 21 years is too high;
On line transfer is not available in all post offices;
Political policies may influence the scheme;
Liquidity is very low and no loan scheme available.