These banks offer the best deposit schemes for your child
The power of compounding helps the corpus grow exponentially and can be useful for your child’s higher education expenses or during marriage
Investment planning from the very first day for your child is always a wise decision. If you put a small amount regularly for a period of 10-15 years, it turns into a sizeable corpus.
The power of compounding helps the corpus grow exponentially and can be useful for your child’s higher education expenses or during marriage. A recurring deposit would be appropriate for this type of disciplined savings.
Banks across India offer different types of recurring deposit schemes targeting this section. The three following banks are offering deposit schemes only for children. Have a look.
PNB: Bal Vikas Deposit Scheme
The nation’s second largest public sector lender offers an attractive RD for the children. It is a combination of an income-cum-fixed-deposit scheme and a recurring deposit scheme.
The minimum recurring deposit amount required every month is Rs 1000, which can be incremented in multiples of Rs 500 during the first five years of the deposit tenure.
The recurring deposit scheme can be taken for five years and the Income option Fixed deposit can be taken for an additional five years.
Income options available to deposit holders are either quarterly or monthly. The total tenure of the deposit scheme will be up to 10 years since the birth of a child.
The current interest rate for the Bal Vikas Deposit scheme is 8% per annum for the 10-year period and will be compounded on a quarterly basis.
ICICI: Child Education Plan
These recurring deposit contributions have to be done for a short period of time and account holders can enjoy pay outs for the entire tenure of the deposit.
The account can be opened in the name of the minor by a parent or guardian. The deposit tenure options available vary from 4 years to up to 10 years and the investment tenure is for 3 years, which can be increased in multiples of three months up to 5 years.
The minimum deposit amount required is Rs 500, which can be increased in multiples of Rs 100. Customers can earn interest on the deposits done during the investment phase with pay outs happening to the minor’s savings account on a quarterly or annual basis.
The minimum tenure of the pay out phase is 1 year and then in multiples of 1 month. The other features available with the child education plan are loan on deposits, premature closure, and partial withdrawals and nominations facility.
For deposits amounts below Rs 1 crore, the interest rate varies between 7.25% and 7.50%. For deposits amounts of Rs 1 crore and above, the interest rate varies from 7.35% to 7.60%.
TMB: Kids RD scheme
The kids recurring deposit scheme from Tamilnad Mercantile Bank offers complete financial support to meet the cost of higher education for children. Customers can make small deposits every month and earn high returns when they require the funds.
Account holders who make regular payments towards a kid’s RD scheme can easily get education loans sanctioned from the bank itself. The minimum tenure that has to be taken by customers in one year with maximum being up to 10 years.
Parents can start saving with a minimum amount of Rs 58, without any upper cap. The minimum investment sum is Rs. 10,000, with no cap applied on the maximum amount. The interest rates offered by Tamilnad Mercantile Bank for RD deposit amounts up to Rs 15 lakh varies from 5.8% to 7.8%.