Post Office Child Plans

Popular Post Office Saving Schemes for Children

Of late, the Government of India has been introducing welfare schemes specifically targeting the young population of the country. With education inflation at an all-time high of 11-12% and increasing costs of living, parents/guardians should start exploring child plans that offer good benefits and features along with increased returns to grow a substantial corpus. 

Post office child plans have the potential to address the financial concerns of parents in addition to being reliable given the sovereign guarantee of the Indian government.

Some of the potential post office child plans that parents can look at are discussed below:

1. Post Office Savings Account 

   Key Factors	Salient Features
   Interest rate	4% per annum
   Minimum deposit annum	Rs.500
   Maximum deposit amount	No limit
   Minimum withdrawal amount	Rs.50

   Other Important Features of Post Office Savings Account:

   • Any parent/guardian can open a Post Office Savings Account on behalf of their children. Further, any child more than the age of ten years can open an account in his/her name.

   • Only one account can be opened on behalf of every child. 

   • The child, on attaining the legal age, is required to submit KYC documents at the servicing post office. 

   • If the minimum balance reduces to Rs.500, withdrawals shall not be permitted. 

   • If the minimum account balance of Rs.500 is not maintained, the account holder shall be charged Rs.100 as an account maintenance fee at the end of the financial year. 

2. 5-Year Post Office Recurring Deposit Account

   Key Factors	Salient Features
   Interest rate	5.8% per annum
   Minimum deposit annum	Rs.100
   Maximum deposit amount	No limit
   Maturity	5 years from the date of opening

   Other Important Features of Post Office Recurring Deposit Account:

   • The interest on the deposited amount is compounded quarterly. Any guardian/parent can open an account on behalf of their child.

   • If subsequent deposits are not made, you will be charged a default amount. The account shall be discontinued following defaults in 4 consecutive months. 

   • Up to 50% of the balance credit can be availed as a loan, provided that deposits for 12 installments have been made.   

   • You have the option to extend the account for another 5 years, by intimating the servicing branch of the post office.

3. Post Office Time Deposit Account

   Key Factors	Salient Features
   Interest rate	1 year - 5.5% 2 years - 5.5% 3 years - 5.5% 5 years - 6.7%
   Minimum deposit annum	Rs.1000
   Maximum deposit amount	No limit
   Maturity	1year/ 2 years/ 3 years/ 5 years

   Other Important Features of Post Office Time Deposit Account:

   • Any parent/guardian of a minor can invest in this account as part of their child planning. 

   • Any child above the age of 10 years can also open an account in their name. 

   • There is no limit to the number of accounts that can be opened for a particular child. 

   • The deposits made under a 5-year time deposit account are eligible for tax benefits U/S 80C of the IT Act, 1961. 

   • The time deposit account can be extended beyond the maturity period by submitting the requisite application form and passbook at the servicing branch of the post office. 

   • Deposits can only be withdrawn after 6 months from the date of deposit. 

4. Post Office Monthly Income Scheme Account 

   Key Factors	Salient Features
   Interest rate	6.6% per annum
   Minimum deposit annum	Rs.1000
   Maximum deposit amount	Single account - Rs.4.5 lakhs Joint Account - Rs.9 Lakhs
   Maturity	5 years from the date of opening

   Other Important Features of Post Office Monthly Income Scheme Account:

   • A joint account can be opened with up to 3 adults.

   • Any parent/guardian planning for the financial security of their children can open an account by depositing a sum of Rs.1000.

   • Interest is paid monthly from the date of opening till the date of maturity.

   • Deposits can be withdrawn after 1 year.

   • Up to 2% can be deducted from the principal amount on the premature closure of the account before 5 years. 

5. Public Provident Fund Account

   Key Factors	Salient Features
   Interest rate	7.1% per annum
   Minimum deposit annum	Rs.500
   Maximum deposit amount	Rs.1,50,000
   Maturity	15 years

   Other Important Features of Public Provident Fund Account:

   • The high-interest rate makes this post office child plan saving scheme a good choice for young parents.

   • One can make the deposits in lump-sum or installments. 

   • Loan and withdrawal facilities are available with a PPF account.

   • Premature closure of the account is only allowed after 5 years from the date of opening the account.

6. Sukanya Samridhi Yojana Account 

   Key Factors	Salient Features
   Interest rate	7.6% per annum
   Minimum deposit annum	Rs.250
   Maximum deposit amount	Rs.1,50,000
   Maturity	21 years from the date of opening

   Other Important Features of Sukanya Samridhi Yojana Account:

   • Sukanya Samridhi Yojana Account is a child plan specifically designed to address the needs of young girls.

   • Any parent/guardian with a girl child below the age of 10 years, can open an account in her name. 

   • A maximum of 2 accounts can be opened against 2 girl children in a family. 

   • Deposits can only be made for 15 yrs from the date of opening the account.  

   • Account-holders can withdraw up to 50% of the balance amount once the girl child reaches the age of 18 or has passed the 10th standard. 

7. National Savings Certificates

   Key Factors	Salient Features
   Interest rate	6.8% per annum
   Minimum deposit annum	Rs.1000
   Maximum deposit amount	No limit
   Maturity	5 years

   Other Important Features of National Savings Certificate:

   • A parent/guardian of a child can invest in this scheme to save for their future. 

   • Deposits under this scheme are eligible for deductions under Section 80C of the Income Tax Account. 

   • The interest is compounded annually and is payable at maturity. 

   • The account cannot be closed before the completion of 5 years except under certain conditions. 

8. Kisan Vikas Patra

   Key Factors	Salient Features
   Interest rate	6.9% per annum
   Minimum deposit annum	Rs.1000
   Maximum deposit amount	No limit
   Maturity	Subject to changes

   Other Important Features of Kisan Vikas Patra:

   • This savings scheme can be opened by any parent/guardian looking to invest in a post office child plan.

   • This scheme does not have a cap on the maximum number of accounts that can be opened. 

   • A minor aged 10 and above can open an account under his/her name. 

   Post office child plans have been a popular choice among parents looking to save for their child's future. These plans come at affordable rates, and the interest rates are competitive. Given that such child plans are backed by the Government of India, one can be assured of their reliability. While these savings schemes can be invested in by an adult, these are excellent savings options for children given that the amount grows till maturity due to compounding annual/quarterly interests.