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G. Madhan

The distinct advantage of this scheme over similar alternatives is the life insurance cover it offers to the guardian.

WANT to instil the saving habit in your child? A few saving options are available to help you catch them young. One such is `Junior Saver', a savings account from Development Credit Bank. The scheme competes with `Junior Package' from Citibank, `Kids Advantage Account' (HDFC Bank) and `Young Star' (ICICI Bank). This account is for those in the 1-18 age group.

Pre-requisites

You need to be introduced by an existing customer of the bank or provide your copy of your (the parent's) passport to open an account.

Along with the filled-in application you need to provide a passport size photograph and Form No 60. In addition you also need to support valid documents for your identity (Pan card or voters ID), signature (Driving licence or employee ID card) and mailing address (ration card with your photograph or bank account statement).

Once you open the account, the bank issues a personalised chequebook and a debit card with a daily spending limit of Rs 1,000 in your child's name.

Features

The features offered under the scheme are common for most of the specialised accounts for children. They include

Savings Account — You can open a savings account for your child at a modest average quarterly balance of Rs 500, unlike normal saving accounts that demand higher amounts. The interest rate offered is similar to that of regular savings accounts.

Recurring deposit: If you want to invest periodically you can take this option.

Fixed deposit: You can also invest a fixed sum in your child's name at the prevailing interest rates.

Funds transfer: You need not necessarily have a savings account with the bank. However, if you have a savings account you can use it to transfer funds to your child's account.

Sweep account facility: You can also set up a sweep account facility from your child's account to an FD. Balances above Rs 10,000 will be swept in multiples of Rs 5,000.

Customised investment options: Based on your risk appetite and investment goals you can also select portfolios/funds or bonds and regularly invest or make a one-time investment. The banks will generally help you select the right portfolio. The distinct advantage of this scheme over similar alternatives is the life insurance cover it offers to the guardian along with the accidental death cover.

You have the option to choose a life cover of any amount between Rs 1 lakh and Rs 5 lakh. The accidental death cover will be an equivalent amount. The insurance cover is offered at an attractive premium.

Suitability

Quite a few tailor-made insurance and mutual fund products are available if you are keen on saving up for your child's future. However, many of these involve locking-in money for long periods. If you are not yet ready to invest in these products, but want to save, you can consider this option.

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