SBI PPF Scheme for Daughter

What is the PPF Scheme for Minors?

The Public Provident Fund (PPF) scheme is a popular small savings scheme that offers a risk-free investment option with attractive returns and triple tax benefits (EEE status). While the scheme is available to all Indian residents, parents or legal guardians can open and operate a PPF account on behalf of their minor child (under 18 years of age), including a daughter, right from birth. This allows the investment to benefit from a longer compounding period, significantly boosting the final maturity amount. Currently, the PPF interest rate for daughters is 7.1% p.a.

Why is the SBI PPF Scheme Special for Daughters?

The PPF scheme is highly beneficial for a daughter because it allows parents to start saving for her when she is very young, maximising the power of compounding.

• Early Start, Big Corpus: If you open a PPF account in your daughter's name when she is 5 years old, the account will mature 15 years later, when she is 20. This timing is often perfect for her higher education or to contribute towards her wedding expenses.
• Peace of Mind: The money she receives at maturity is completely tax-free. This provides parents with the peace of mind that their daughter's future is financially secured without any tax liabilities.

Example of How the SBI PPF Scheme for Daughters Works

Let's see the financial impact if you deposit ₹30,000 every year in your daughter's PPF account for the entire 15-year tenure (at the current interest rate of 7.1%):

By investing ₹4.5 lakh, you earn approximately ₹8.5 lakh in tax-free interest. You can also calculate your PPF amount with different using using the PPF calculator available online. 

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How to Open a PPF Account in SBI for Daughters

Opening a PPF account with SBI in your daughter's name is a straightforward process:

• Visit the Branch: Go to your nearest SBI branch.
• Fill the Form: Fill out the dedicated PPF account opening form (Form 1).
• Required Documents: Carry the following documents:
  • Guardian's Documents: Aadhaar Card and PAN Card.
  • Daughter's Documents: Birth Certificate (as proof of age) and Aadhaar Card (if available).
  • Passport-size photographs (two each for the guardian and the minor).
• First Deposit: Make your first deposit, which must be at least ₹500.
• Account Management: Since your daughter is a minor, the account will be opened in her name, but you will be designated as the guardian and responsible for its operation until she turns 18.
• Passbook: Once the account is opened, you will receive a passbook detailing all deposits and interest earned.
• Online Opening: If you already have a savings account with SBI, you may be able to open the PPF account through SBI's online banking for added convenience.

Rules for Depositing, Withdrawing, and Loan

1. Depositing Money

   • Flexibility: You can deposit money once a month or once a year, as per your convenience.
   • Modes: Deposits can be made by cash, cheque, or through online transfer from your SBI account.
   • Interest Rule: If you choose to deposit money monthly, ensure you deposit it in the first 5 days of the month. This is because the PPF interest for that month is calculated on the minimum balance between the close of the 5th day and the last day of the month.
   • Mandatory Deposit: It is essential to deposit at least ₹500 in a year to keep the account active.

2. Withdrawal and Loan

   • Partial Withdrawal: You can withdraw money partially after 7 years if required, but the amount is limited.
   • Loan Facility: You also have the option to take a loan against the PPF balance in the initial years.
   • Extension: While the account matures in 15 years, you can extend the tenure for a block of 5 years at a time if you wish to continue saving.

Conclusion

The SBI PPF scheme is an excellent, risk-free and tax-free foundation for your daughter's financial life. By opening an account early and making regular contributions, you leverage the power of compounding to build a significant corpus that ensures she can pursue her aspirations without financial burden.