Fixed Deposit Schemes for Children

What are Fixed Deposit Schemes for Children?

Child Fixed Deposit Plans are the direct and guaranteed returns investment schemes offered by Public/ Private Banks and Non-Banking Finance Companies (NBFCs). The investors earn a fixed interest rate on the principal amount for a predefined tenure to grow the corpus. 

The parent/ guardian can manage the account until the child reaches maturity age, after which, only the child can operate FD accounts under their name.

Fixed Deposit Plans for Children are the best way to boost their savings with safety and security.

Best Fixed Deposit for Child Plans

Let us learn the best FD Plans for Children offered by top Banks and NBFCs in India in 2023 from the table below:

FD Schemes for Children in Detail

1. PNB Balika Shiksha Scheme

   PNB provides this safe and simple guaranteed returns scheme for girls to secure finances for their education and marriage.

   The features and eligibility criteria of this Child Fixed Deposit Plan are as follows:

   Eligibility Criteria	Details
   Marital Status	Unmarried Girls
   Age Criteria	Less than 16 years (as of 31st March) while entering Class IX
   Educational Criteria	Kasturba Gandhi Balika Vidyalayas: Class VIII girls enrolling on Class IX State/ UT Govt. and Local Bodies/ Govt. Aided Schools: Class VIII girls enrolling in Class IX

   1. Maturity Amount Withdrawal:

      The beneficiary must submit the proof of following conditions:

      • Passing Certificate for Class X Board Exam

      • Proof of attaining the age of 18 years

      • Certificate by School Principal/ Head for continuous studies of 2 years in Class IX and X

   2. Premature Cancellation of FD plan:

      • Normal Conditions: Not allowed in normal conditions

      • Death of Beneficiary Before Age of 18 Years: Amount transfers to the Government of India

   3. Exclusions:

      • Private School students are excluded

      • Central Govt. School students are excluded

2. YES Bank Fixed Deposit for Child 

   Yes Bank FD for Child helps parents to provide an adequate financial net for their children. Let us learn their features in the list below:

   Eligibility Criteria	Documents Required
   A parent/ guardian in the name of a minor child	ID Proof Address Proof Duly Filled Application Form

   • Tax Benefits: The 5-year tax-saving FDs for Child provides the benefit to get tax deductions under Section 80 C and 10 (10D) of the IT Act, 1961. In addition, you keep earning the interest benefits same as the regular FD plan.

   • Inter-operability: The account holder can manage their FD account online as well as with their nearby YES Bank branch.

   • No Penalties on Early Exit: YES Bank do not levy any penalty if you break your FD for Child early before the expiry of the tenure.

3. HDFC Bank Kids Advantage Account

   HDFC Kids Advantage Account is amongst the best Fixed Deposit for Child Plans that help parents secure their child’s financial future. The plan also educates the children to manage their funds.

   Let us learn the major features of this child fixed deposit plan in the list below:

   • Education Insurance: Free coverage of Rs. 1 lakh in case of demise of the parent/ guardian in an accident

   • Auto-Debit from Parent/Guardians Savings Account: The auto-debit is monthly credited to the Kid’s Advantage Account

   • MoneyMaximizer Facility: An excess amount from Rs. 35,000 is automatically made into a Fixed Deposit for the Child for 1 year and 2 day

   • My Passion Fund: Guides the children to manage their own money with small periodic savings of Rs. 1,000 or more.

   • Systematic Investment Plans (SIPs): The child can make small investments in mutual funds at a young age through the Investment Service Account

   • The plan also bundles with Sukanya Samridhi Yojana

4. Sukanya Samridhi Yojana

   Sukanya Samridhi Yojana (SSY) is a government–backed social scheme aiming to abolish gender discrimination, women empowerment, and girl-child protection. It is an FD scheme for a girl child that helps create a corpus for their education or other crucial expenses.

   The key features of the Sukanya Samridhi Yojana are as follows:

   Eligibility Criteria	Details
   Beneficiary	Girl Child
   Entry Age	Below 10 years of age
   Exit Age	Up to the marriage age of the girl child after 18 years of age
   Maximum No. of SSY Accounts	Max. of 2 girls in a family More than 2 SSY accounts in a family are allowed if girls are twins/triplets

   • Allows only one SSY Account for one girl child

   • Finance Ministry periodically updates the interest rate of SSY

   • Interest is credited to the SSY account every year

   • Maximum tenure of investment in Sukanya Samridhi Yojana: 15 years

   • Tax Benefits on Investment: Income tax deductions allowed u/ Section 80C of the IT Act, 1961

   • Tax Benefits on Interest: Tax-free u/ IT Act

   • Partial Withdrawal: Up to 50% of the balance amount is allowed when the girl attains the age of 1 8 years or passes X-Class

   • Premature Closure: On the death of the beneficiary or extreme grounds of compassion

5. Post Office Time Deposit Account

   Post Office Time Deposit is the most secure and best FD Plan for Child offered at high-interest rates.

   The features of Post Office Time Deposit are as follows:

   Eligibility Criteria	Details
   Entry age	Above 10 years of age
   Maximum Time Deposit Accounts	Any number of accounts for one accountholder

   Post Office interest rates for the fixed deposit for Child (1 Jan 2023 – 31 March 2023)

   Period of FD for Child	Interest Rates
   1-year	6.6% p.a.
   2-year	6.8% p.a.
   3-year	6.9% p.a.
   5-year	7.0% p.a.

   • Interest is credited annually to the FD account

   • Tax Benefits with 5-year FD for Child: Provides tax deductions u/ Sec. 80C of the Income Tax Act, 1961.

   • Less interest is payable on premature closure of the Post Office Time Deposit (TD) Account

   • TD Balance as Collateral/ Security can be kept with the following institutions:

   • Indian President

   • State Governor

   • Reserve Bank of India/ Scheduled Commercial Banks/ Co-operative Societies/ Cooperative Bank

   • Public Sector Units (PSUs)/ Government Companies/ Local Govt. Authorities

   • Housing Finance Companies (HFCs)

Documents Required

The list of documents required to buy a Child Fixed Deposit Plan is as follows:

• Date of Birth of the minor child

• PAN Number of the Parent/ Guardian

• Voter ID/ Driving License/ Passport photocopy/ Aadhar Card of the Parent/ Guardian

• Address Proof of the Parent/ Guardian

How to Get a Fixed Deposit for Child?

A parent/ guardian can buy a Fixed Deposit for the child until the policyholder attains the maturity age of 18 years. 

The steps to open an FD for the child are as follows:

Step 1: Go to the official website, visit the branch, or apply through the Net Banking of the respective bank/ NBFC

Step 2: Click on the Fixed Deposit section

Step 3: Enter the required details of the child and the parent/ guardian in the proscribed sections

Step 4: Upload the mentioned documents, photographs, and ID proofs, and complete your KYC

Step 5: Once the application is duly filled, the bank/ NBFC verifies the details provided by the applicant

Step 6: Upon verification of the provided proofs, a new Fixed Deposit for the Child is opened

Benefits of Buying Fixed Deposit Plan for Child

Let us learn the benefits of a Fixed Deposit for Child Plan through the list mentioned below:

• FD for a Child can be bought for as young as a 1-year-old

• Best fixed deposit plans offer high-interest rates in the range of 7.00 - 8.20% p.a.

• A fixed deposit plan for a child offers risk-free, guaranteed returns upon maturity

• Fixed deposits come with flexible tenures of 7 days to 10 years depending on the accountholder’s choice

• A parent/ guardian can save and create more funds as per their long-term financial horizon

• The child fixed deposit plans can be bought with a minimum initial amount

• Investments are not required in regular frequency

• You can create a financial net for your child’s education and major expenses

• The fixed deposit for a child can be bought online and provides the facility to make hassle-free regular payments in a few clicks

To Conclude

Various banks and Non- Banking Finance Companies (NBFCs) offer the best FD Plans in India to help financially secure the future of your child. A good corpus is a boon in times of need for a family.

The benefits of buying a fixed deposit plan for your child are countless in crucial situations. However, before deciding upon the best FD Plan for your child, it is important to gain complete information about the fixed deposit.

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