Are small-savings schemes regaining the support of retail investors in Tamil Nadu?
Though the negative trend in total net collections of small-savings schemes continues, it is on the decline. Compared with the net collections of ‘minus’ Rs. 1,506.83 crore for 2012-2013, it went down to ‘minus’ Rs. 730.78 crore the next year. This gives an indication that withdrawals are not happening to the extent that they took place a couple of years ago, says B. Raju Babu, Regional Director of the National Savings Institute, a government body that collects data on small- savings schemes.
Another reason could be that the interest rates under the schemes have become almost comparable with those of nationalised banks for fixed deposits, given that the rates offered by the banks have been hovering around 9 per cent in the last few years, he adds.
As of now, the rates of interest of the small savings schemes vary from 8.4 per cent for the one-year Post Office Time Deposit to 9.2 per cent for the Senior Citizen Savings Scheme.
T. Murthy, Chief Postmaster-General (Tamil Nadu Circle), says that since 2011-12, the net increase in the number of live accounts was 36 lakh, which included post office savings accounts. The overall number of live accounts was 2.37 crore at the end of 2013-2014.
Referring to the Union government’s announcement on the revival of the Kisan Vikas Patra (KVP) and the launch of the National Savings Certificate (NSC) with insurance cover, apart from the increase in the ceiling of the Public Provident Fund (PPF) from Rs. 1 lakh to Rs. 1.5 lakh, he says these measures will provide a fillip to the small-savings schemes. The government’s guidelines for the KVP and the NSC are awaited.
However, an official of the State government views the development differently. The real test of the popularity of the small-savings schemes lies in gross collections, which have become flat. Except in the case of the PPF, there is no provision for foreclosure in other schemes. So, withdrawals are generally not an option for the retail investors with regard to the small-savings schemes.
A senior executive of a leading non-banking financial company says private companies which accept deposits from the public are encouraging deposits of not more than three years. This factor has to be kept in mind by the Union government while designing the products such as the KVP and the NSC. The small-savings schemes should be tailored to the needs of various sections, the executive adds.
