An Example of Sukanya Yojana Monthly Deposit
Sukanya Samriddhi Yojana – the flagship program launched by PM Narendra Modi – is one of the most popular government schemes currently running in India. This scheme is particularly designed for female children with absolutely no scope for including any male child from a family.
The scheme offers lucrative interest rates and even better, despite being a small investment scheme, the scheme is linked to market. This means that if market variations lead to increase in interest rates, government will revise the interest rates offered to subscribers of the scheme. On the downside however, if the interest rate falls, there will be a downward revision of interest rates offered by Sukanya Samriddhi Yojana. This revision however takes place quarterly.
The best part of the Yojana is the tax benefits it enjoys. The Sukanya Samriddhi Scheme falls in EEE category. EEE means Exempt-Exempt-Exempt. This simply means that investments (inflow of money) are not taxed, interest earnings (growth) are not taxed and withdrawals (outflow of money) are not taxed either, making the SSY one of the most profitable government-backed small investment schemes available in India.
Anyway, we are not here to discuss about Sukanya Samriddhi Yojana in general. Those details can be found through various online resources. We are here to take a quick look at an example of how Monthly Deposits under this scheme work.
Before we start with an example, we need to clarify one thing. It is very important. You may often read that deposits grow at a compounded rate. This is partially true. This is how it works:
Month on month, the interest is calculated as simple interest. Interest earned is not added to the principle balance in the account. Only at the end of the financial year, the total interest earnings are calculated and added to the account balance. That’s when a compounded calculation is made. However, again from the next month onwards, simple interest calculations begin. This will become clear as we start working with the example.
An example of Sukanya Samriddhi Yojana calculation with monthly deposit
Here in this example we will start with a few assumptions to iron out the complex bumps that can arise during the entire lifetime of an account under Sukanya Samriddhi account. Here are the assumptions:
- Interest rates offered by the government doesn’t change over time. It remains fixed for the entire year and is determined at the beginning of the financial year and continues till the end of the financial year.
- No premature withdrawals are made – either for education or for marriage.
- The account continues to be operational for the full tenure of 21 years.
- Deposits are made for the maximum allowed period of 14 years.
- No deposit breaks take place in between and no penalties are paid whatsoever for reactivating the account.
- Finally, the depositor deposits exactly INR 2000 per month on the first date of each month.
For this example, we will use the current applicable interest rate of 8.6% which is offered by the government. We will assume that the interest rate will not change during the entire tenure of the account.
So, let us begin with the example:
Here,
Monthly investment = INR 2000
Yearly interest = 8.6%
Monthly interest = (8.6 ÷ 12)% = 0.716% = 0.7% (approximation). The monthly interest value is used for interest calculation in the example below.
| Year 1 | |||
| Month | Deposit | Balance | Interest |
| Apr | 2,000 | 2,000 | 14 |
| May | 2,000 | 4,000 | 29 |
| Jun | 2,000 | 6,000 | 43 |
| Jul | 2,000 | 8,000 | 57 |
| Aug | 2,000 | 10,000 | 72 |
| Sep | 2,000 | 12,000 | 86 |
| Oct | 2,000 | 14,000 | 100 |
| Nov | 2,000 | 16,000 | 115 |
| Dec | 2,000 | 18,000 | 129 |
| Jan | 2,000 | 20,000 | 143 |
| Feb | 2,000 | 22,000 | 158 |
| Mar | 2,000 | 24,000 | 172 |
| Year End Balance | 25,118 | 1,118 | |
| Year 2 | |||
| Month | Deposit | Balance | Interest |
| Apr | 2,000 | 27,118 | 194 |
| May | 2,000 | 29,118 | 209 |
| Jun | 2,000 | 31,118 | 223 |
| Jul | 2,000 | 33,118 | 237 |
| Aug | 2,000 | 35,118 | 252 |
| Sep | 2,000 | 37,118 | 266 |
| Oct | 2,000 | 39,118 | 280 |
| Nov | 2,000 | 41,118 | 295 |
| Dec | 2,000 | 43,118 | 309 |
| Jan | 2,000 | 45,118 | 323 |
| Feb | 2,000 | 47,118 | 338 |
| Mar | 2,000 | 49,118 | 352 |
| Year End Balance | 52,396 | 3,278 | |
| Year 3 | |||
| Month | Deposit | Balance | Interest |
| Apr | 2,000 | 54,396 | 390 |
| May | 2,000 | 56,396 | 404 |
| Jun | 2,000 | 58,396 | 419 |
| Jul | 2,000 | 60,396 | 433 |
| Aug | 2,000 | 62,396 | 447 |
| Sep | 2,000 | 64,396 | 462 |
| Oct | 2,000 | 66,396 | 476 |
| Nov | 2,000 | 68,396 | 490 |
| Dec | 2,000 | 70,396 | 505 |
| Jan | 2,000 | 72,396 | 519 |
| Feb | 2,000 | 74,396 | 533 |
| Mar | 2,000 | 76,396 | 548 |
| Year End Balance | 82,020 | 5,624 | |
| Year 4 | |||
| Month | Deposit | Balance | Interest |
| Apr | 2,000 | 84,020 | 602 |
| May | 2,000 | 86,020 | 616 |
| Jun | 2,000 | 88,020 | 631 |
| Jul | 2,000 | 90,020 | 645 |
| Aug | 2,000 | 92,020 | 659 |
| Sep | 2,000 | 94,020 | 674 |
| Oct | 2,000 | 96,020 | 688 |
| Nov | 2,000 | 98,020 | 702 |
| Dec | 2,000 | 100,020 | 717 |
| Jan | 2,000 | 102,020 | 731 |
| Feb | 2,000 | 104,020 | 745 |
| Mar | 2,000 | 106,020 | 760 |
| Year End Balance | 114,192 | 8,172 | |
| Year 5 | |||
| Month | Deposit | Balance | Interest |
| Apr | 2,000 | 116,192 | 833 |
| May | 2,000 | 118,192 | 847 |
| Jun | 2,000 | 120,192 | 861 |
| Jul | 2,000 | 122,192 | 876 |
| Aug | 2,000 | 124,192 | 890 |
| Sep | 2,000 | 126,192 | 904 |
| Oct | 2,000 | 128,192 | 919 |
| Nov | 2,000 | 130,192 | 933 |
| Dec | 2,000 | 132,192 | 947 |
| Jan | 2,000 | 134,192 | 962 |
| Feb | 2,000 | 136,192 | 976 |
| Mar | 2,000 | 138,192 | 990 |
| Year End Balance | 149,130 | 10,939 | |
| Year 6 | |||
| Month | Deposit | Balance | Interest |
| Apr | 2,000 | 151,130 | 1,083 |
| May | 2,000 | 153,130 | 1,097 |
| Jun | 2,000 | 155,130 | 1,112 |
| Jul | 2,000 | 157,130 | 1,126 |
| Aug | 2,000 | 159,130 | 1,140 |
| Sep | 2,000 | 161,130 | 1,155 |
| Oct | 2,000 | 163,130 | 1,169 |
| Nov | 2,000 | 165,130 | 1,183 |
| Dec | 2,000 | 167,130 | 1,198 |
| Jan | 2,000 | 169,130 | 1,212 |
| Feb | 2,000 | 171,130 | 1,226 |
| Mar | 2,000 | 173,130 | 1,241 |
| Year End Balance | 187,074 | 13,943 | |
| Year 7 | |||
| Month | Deposit | Balance | Interest |
| Apr | 2,000 | 189,074 | 1,355 |
| May | 2,000 | 191,074 | 1,369 |
| Jun | 2,000 | 193,074 | 1,384 |
| Jul | 2,000 | 195,074 | 1,398 |
| Aug | 2,000 | 197,074 | 1,412 |
| Sep | 2,000 | 199,074 | 1,427 |
| Oct | 2,000 | 201,074 | 1,441 |
| Nov | 2,000 | 203,074 | 1,455 |
| Dec | 2,000 | 205,074 | 1,470 |
| Jan | 2,000 | 207,074 | 1,484 |
| Feb | 2,000 | 209,074 | 1,498 |
| Mar | 2,000 | 211,074 | 1,513 |
| Year End Balance | 228,280 | 17,206 | |
| Year 8 | |||
| Month | Deposit | Balance | Interest |
| Apr | 2,000 | 230,280 | 1,650 |
| May | 2,000 | 232,280 | 1,665 |
| Jun | 2,000 | 234,280 | 1,679 |
| Jul | 2,000 | 236,280 | 1,693 |
| Aug | 2,000 | 238,280 | 1,708 |
| Sep | 2,000 | 240,280 | 1,722 |
| Oct | 2,000 | 242,280 | 1,736 |
| Nov | 2,000 | 244,280 | 1,751 |
| Dec | 2,000 | 246,280 | 1,765 |
| Jan | 2,000 | 248,280 | 1,779 |
| Feb | 2,000 | 250,280 | 1,794 |
| Mar | 2,000 | 252,280 | 1,808 |
| Year End Balance | 273,030 | 20,750 | |
| Year 9 | |||
| Month | Deposit | Balance | Interest |
| Apr | 2,000 | 275,030 | 1,971 |
| May | 2,000 | 277,030 | 1,985 |
| Jun | 2,000 | 279,030 | 2,000 |
| Jul | 2,000 | 281,030 | 2,014 |
| Aug | 2,000 | 283,030 | 2,028 |
| Sep | 2,000 | 285,030 | 2,043 |
| Oct | 2,000 | 287,030 | 2,057 |
| Nov | 2,000 | 289,030 | 2,071 |
| Dec | 2,000 | 291,030 | 2,086 |
| Jan | 2,000 | 293,030 | 2,100 |
| Feb | 2,000 | 295,030 | 2,114 |
| Mar | 2,000 | 297,030 | 2,129 |
| Year End Balance | 321,629 | 24,599 | |
| Year 10 | |||
| Month | Deposit | Balance | Interest |
| Apr | 2,000 | 323,629 | 2,319 |
| May | 2,000 | 325,629 | 2,334 |
| Jun | 2,000 | 327,629 | 2,348 |
| Jul | 2,000 | 329,629 | 2,362 |
| Aug | 2,000 | 331,629 | 2,377 |
| Sep | 2,000 | 333,629 | 2,391 |
| Oct | 2,000 | 335,629 | 2,405 |
| Nov | 2,000 | 337,629 | 2,420 |
| Dec | 2,000 | 339,629 | 2,434 |
| Jan | 2,000 | 341,629 | 2,448 |
| Feb | 2,000 | 343,629 | 2,463 |
| Mar | 2,000 | 345,629 | 2,477 |
| Year End Balance | 374,407 | 28,778 | |
| Year 11 | |||
| Month | Deposit | Balance | Interest |
| Apr | 2,000 | 376,407 | 2,698 |
| May | 2,000 | 378,407 | 2,712 |
| Jun | 2,000 | 380,407 | 2,726 |
| Jul | 2,000 | 382,407 | 2,741 |
| Aug | 2,000 | 384,407 | 2,755 |
| Sep | 2,000 | 386,407 | 2,769 |
| Oct | 2,000 | 388,407 | 2,784 |
| Nov | 2,000 | 390,407 | 2,798 |
| Dec | 2,000 | 392,407 | 2,812 |
| Jan | 2,000 | 394,407 | 2,827 |
| Feb | 2,000 | 396,407 | 2,841 |
| Mar | 2,000 | 398,407 | 2,855 |
| Year End Balance | 431,724 | 33,317 | |
| Year 12 | |||
| Month | Deposit | Balance | Interest |
| Apr | 2,000 | 433,724 | 3,108 |
| May | 2,000 | 435,724 | 3,123 |
| Jun | 2,000 | 437,724 | 3,137 |
| Jul | 2,000 | 439,724 | 3,151 |
| Aug | 2,000 | 441,724 | 3,166 |
| Sep | 2,000 | 443,724 | 3,180 |
| Oct | 2,000 | 445,724 | 3,194 |
| Nov | 2,000 | 447,724 | 3,209 |
| Dec | 2,000 | 449,724 | 3,223 |
| Jan | 2,000 | 451,724 | 3,237 |
| Feb | 2,000 | 453,724 | 3,252 |
| Mar | 2,000 | 455,724 | 3,266 |
| Year End Balance | 493,970 | 38,246 | |
| Year 13 | |||
| Month | Deposit | Balance | Interest |
| Apr | 2,000 | 495,970 | 3,554 |
| May | 2,000 | 497,970 | 3,569 |
| Jun | 2,000 | 499,970 | 3,583 |
| Jul | 2,000 | 501,970 | 3,597 |
| Aug | 2,000 | 503,970 | 3,612 |
| Sep | 2,000 | 505,970 | 3,626 |
| Oct | 2,000 | 507,970 | 3,640 |
| Nov | 2,000 | 509,970 | 3,655 |
| Dec | 2,000 | 511,970 | 3,669 |
| Jan | 2,000 | 513,970 | 3,683 |
| Feb | 2,000 | 515,970 | 3,698 |
| Mar | 2,000 | 517,970 | 3,712 |
| Year End Balance | 561,569 | 43,599 | |
| Year 14 | |||
| Month | Deposit | Balance | Interest |
| Apr | 2,000 | 563,569 | 4,039 |
| May | 2,000 | 565,569 | 4,053 |
| Jun | 2,000 | 567,569 | 4,068 |
| Jul | 2,000 | 569,569 | 4,082 |
| Aug | 2,000 | 571,569 | 4,096 |
| Sep | 2,000 | 573,569 | 4,111 |
| Oct | 2,000 | 575,569 | 4,125 |
| Nov | 2,000 | 577,569 | 4,139 |
| Dec | 2,000 | 579,569 | 4,154 |
| Jan | 2,000 | 581,569 | 4,168 |
| Feb | 2,000 | 583,569 | 4,182 |
| Mar | 2,000 | 585,569 | 4,197 |
| Year End Balance | 634,982 | 49,413 | |
| Year 15 | |||
| Month | Deposit | Balance | Interest |
| Apr | 0 | 634,982 | 4,551 |
| May | 0 | 634,982 | 4,551 |
| Jun | 0 | 634,982 | 4,551 |
| Jul | 0 | 634,982 | 4,551 |
| Aug | 0 | 634,982 | 4,551 |
| Sep | 0 | 634,982 | 4,551 |
| Oct | 0 | 634,982 | 4,551 |
| Nov | 0 | 634,982 | 4,551 |
| Dec | 0 | 634,982 | 4,551 |
| Jan | 0 | 634,982 | 4,551 |
| Feb | 0 | 634,982 | 4,551 |
| Mar | 0 | 634,982 | 4,551 |
| Year End Balance | 689,591 | 54,608 | |
| Year 16 | |||
| Month | Deposit | Balance | Interest |
| Apr | 0 | 689,591 | 4,942 |
| May | 0 | 689,591 | 4,942 |
| Jun | 0 | 689,591 | 4,942 |
| Jul | 0 | 689,591 | 4,942 |
| Aug | 0 | 689,591 | 4,942 |
| Sep | 0 | 689,591 | 4,942 |
| Oct | 0 | 689,591 | 4,942 |
| Nov | 0 | 689,591 | 4,942 |
| Dec | 0 | 689,591 | 4,942 |
| Jan | 0 | 689,591 | 4,942 |
| Feb | 0 | 689,591 | 4,942 |
| Mar | 0 | 689,591 | 4,942 |
| Year End Balance | 748,896 | 59,305 | |
| Year 17 | |||
| Month | Deposit | Balance | Interest |
| Apr | 0 | 748,896 | 5,367 |
| May | 0 | 748,896 | 5,367 |
| Jun | 0 | 748,896 | 5,367 |
| Jul | 0 | 748,896 | 5,367 |
| Aug | 0 | 748,896 | 5,367 |
| Sep | 0 | 748,896 | 5,367 |
| Oct | 0 | 748,896 | 5,367 |
| Nov | 0 | 748,896 | 5,367 |
| Dec | 0 | 748,896 | 5,367 |
| Jan | 0 | 748,896 | 5,367 |
| Feb | 0 | 748,896 | 5,367 |
| Mar | 0 | 748,896 | 5,367 |
| Year End Balance | 813,301 | 64,405 | |
| Year 18 | |||
| Month | Deposit | Balance | Interest |
| Apr | 0 | 813,301 | 5,829 |
| May | 0 | 813,301 | 5,829 |
| Jun | 0 | 813,301 | 5,829 |
| Jul | 0 | 813,301 | 5,829 |
| Aug | 0 | 813,301 | 5,829 |
| Sep | 0 | 813,301 | 5,829 |
| Oct | 0 | 813,301 | 5,829 |
| Nov | 0 | 813,301 | 5,829 |
| Dec | 0 | 813,301 | 5,829 |
| Jan | 0 | 813,301 | 5,829 |
| Feb | 0 | 813,301 | 5,829 |
| Mar | 0 | 813,301 | 5,829 |
| Year End Balance | 883,245 | 69,944 | |
| Year 19 | |||
| Month | Deposit | Balance | Interest |
| Apr | 0 | 883,245 | 6,330 |
| May | 0 | 883,245 | 6,330 |
| Jun | 0 | 883,245 | 6,330 |
| Jul | 0 | 883,245 | 6,330 |
| Aug | 0 | 883,245 | 6,330 |
| Sep | 0 | 883,245 | 6,330 |
| Oct | 0 | 883,245 | 6,330 |
| Nov | 0 | 883,245 | 6,330 |
| Dec | 0 | 883,245 | 6,330 |
| Jan | 0 | 883,245 | 6,330 |
| Feb | 0 | 883,245 | 6,330 |
| Mar | 0 | 883,245 | 6,330 |
| Year End Balance | 959,204 | 75,959 | |
| Year 20 | |||
| Month | Deposit | Balance | Interest |
| Apr | 0 | 959,204 | 6,874 |
| May | 0 | 959,204 | 6,874 |
| Jun | 0 | 959,204 | 6,874 |
| Jul | 0 | 959,204 | 6,874 |
| Aug | 0 | 959,204 | 6,874 |
| Sep | 0 | 959,204 | 6,874 |
| Oct | 0 | 959,204 | 6,874 |
| Nov | 0 | 959,204 | 6,874 |
| Dec | 0 | 959,204 | 6,874 |
| Jan | 0 | 959,204 | 6,874 |
| Feb | 0 | 959,204 | 6,874 |
| Mar | 0 | 959,204 | 6,874 |
| Year End Balance | 1,041,695 | 82,492 | |
| Year 21 | |||
| Month | Deposit | Balance | Interest |
| Apr | 0 | 1,041,695 | 7,465 |
| May | 0 | 1,041,695 | 7,465 |
| Jun | 0 | 1,041,695 | 7,465 |
| Jul | 0 | 1,041,695 | 7,465 |
| Aug | 0 | 1,041,695 | 7,465 |
| Sep | 0 | 1,041,695 | 7,465 |
| Oct | 0 | 1,041,695 | 7,465 |
| Nov | 0 | 1,041,695 | 7,465 |
| Dec | 0 | 1,041,695 | 7,465 |
| Jan | 0 | 1,041,695 | 7,465 |
| Feb | 0 | 1,041,695 | 7,465 |
| Mar | 0 | 1,041,695 | 7,465 |
| Year End Balance | 1,131,281 | 89,586 | |
If you notice carefully, at the beginning of the second year, the total interest earning gets added to the account balance and then new investment is added to the total balance. Only after that, the interest is calculated. This means that compounded growth takes place only once every year and then the system reverts back to basic simple interest calculation.
Also, you will notice that at the end of 14th year, that is starting from 15th year, no fresh investments are allowed. This means that the maximum number of investment years – 14 years – is fulfilled. The account then continues to earn interest without any further addition in total balance in form of incoming investment. The account balance grows only once a year when at the end of each year, the total interest earnings are added to the account balance.
So basically the total investment in 14 years is: 14 x 12 x 2000 = INR 3,36,000 but when the account finally matures at the end of 21 years, the amount grows to INR 1,131,281. This is more than 3 times the actual invested money.
This is how monthly investments work in Sukanya Samriddhi Yojana. However, every quarter the interest rate will change in actual scenario. So, the final maturity amount can be different from what is shown in this example.
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