The much popular Sukanya Samriddhi Account has definitely some major advantages and benefits for the girl child. This may even encourage people to invest in the girl child's future due to attractive interest rates.
However, individuals who are planning to consider should also look at some of the disadvantages before investing.
Also read: What is The Difference Between Sukanya Samriddhi and PPF? Which is Better Option?
Some of the drawbacks of the Sukanya Samriddhi Account are as follows:
1) Lock In Period
This account is of no help for short term investors. The deposited amount matures only after 21 years. As per the scheme and one will have to deposit for 14 years and you will be getting maturity after 21 years.
The account can only be opened for girls upto 10 years of age. However, for FY 2014-15, one year relaxation is provided.
2) Maximum Two Accounts
Another restriction with this account is an individual can open any two accounts for two girls. He is not eligible to open another account if he has three daughters.
3) Premature Withdrawal
If considering this account, one should see as long term instrument only, as premature withdrawal is not allowed except in case of death of girl child or on maturity.
4) No Online Facility
Another drawback as of now is that one cannot invest money online, either by cheque, DD can be deposited.
5) Interest Rate May Vary
Every year the government will decide the interest part, which will be linked to government bonds. However, one should check whether it can combat inflation rate. Returns can be low when compared to market linked schemes.
Overall investment is not risky and one may get moderate returns. This product is not a flexible instrument in terms of offering liquidity.
However, government will continuous monitoring the product and may make it attractive in the future.