BANKING TRADE AND COMMERCE

SMALL SAVINGS

Small Savings : The small savings movement in India was started during 1945 as a method of mopping up purchasing power to fight the rising spiral of inflation. The Planning Commission later on recognised small savings as the most important source of financing Government expenditure on capital schemes included in the Five Year Plans. The Government of India have been, therefore, trying to intensify small savings as a mass movement aimed at cultivating a national habit of thrift. Today, of all the targeted resources of the Fourth Five Year Plan, such as, taxation, open market operations, borrowings, small savings, etc., small savings are considered to be an effective mode of mobilising resources of the people in a democratic and economically the least painful way. Small savings are thus a major potential force in building a happy and prosperous India.

The following categories of investments have been classified as small savings investments:—

(1) Post office savings bank deposits.

(2) Twelve year national plan savings certificates issued with effect from 1st June 1957 including holdings of twelve year and seven year national savings certificates as well as ten year national plan certificates issued prior to June 1957.

(3) Ten-year treasury savings deposit certificates issued with effect from 1st June 1957 including past holdings of treasury savings deposit certificates issued prior to that date,

(4) Fifteen year annuity certificates.

(5) Cumulative time deposit scheme.

Post Office Savings Bank Deposits.—The post office savings bank deposits constitute by far a very important, source for the collection of small savings especially from people of small means. The agency of the post office savings bank is very much suited to the rural areas of our country where there are very little banking facilities. Moreover, as an agency of the Government, it enjoys complete confidence of the people. Post office savings banks provide a large net-work of offices spread throughout the country and are capable of being developed without incurring considerable expenditure. Savings bank activity coustitutes one of the many functions of the post offices and can therefore, be carried on economically which is not possible in case of other banking institutions.

An account can be opened at any post office with as small a sum as Rs. 2 by an individual or by two persons jointly, payable to (ii) both or (ii) either. Interest allowed on these deposits on individual and joint account is at Rs. 2½ per cent for the first 10,000 rupees and at 2 per cent on the balance in excess of that amount. The maximum limit of investment is Rs. 15,000 for an individual. These facilities are also extended to non profit making institutions and co-operative societies.

Twelve-Year National Plan Savings Certificates. A new series of these twelve-year national plan savings certificates was issued by the Government of India with effect from June 1957, when the then existing seven-year and twelve-year national savings certificates and ten-year national plan certificates were discontinued.

The new certificates carry a higher rate of interest yielding on maturity a return of 5.4 per cent per annum simple interest and 4.25 per cent per annum componud interest free of income tax. They are available at all post offices conducting savings bank business in denominations of Rs. 5, Rs. 10, Rs. 50, Rs. 100, Rs. 500, Rs. 1,000 and Rs. 5,000.

Ten-Year Treasury Savings Deposit Certificates.—Ten-year treasury savings deposit certificates bearing interest at four per cent per annum can be purchased at the offices of the Reserve Bank of India or State Bank of India and its subsidiaries. They are available also at all treasuries and sub-treasuries where there are no offices of the aforesaid banks.

The treasury savings deposit certificates are sold in denominations, which are multiples of Rs. 50. The interest is paid annually on the completion of each period of twelve calendar months from the date of deposit. This type of investment is suitable particularly for those who want to keep their capital intact and to earn regular annual interest for normal recurrent expenditure. The certificates are exempt from income-tax, can be hypothecated and can be encashed before they reach maturity, with due allowance for discount.

Fifteen-Year Annuity Certificates.—This is an ideal scheme for investing accumulated savings in one lump sum which yields a regular monthly income for the investor and his family. The amount invested in these certificates is refunded together with compound interest at approximately 4.25 per cent annum by way of monthly payments spread over a period of fifteen years. The amount paid to the investor each month is free of income tax.

The fifteen year annuity certificates are available at all places where treasury savings deposit certificates are sold. They were issued from 2nd January 1958, in multiples of Rs. 3,325 up to Rs. 26,600 securing to the holder a substantial monthly payment.

Cumulative Time Deposit Scheme.—This scheme was started from 2nd January, 1958. It provides opportunity to small savers to save for specific purposes, such as, marriage, higher education, housing, etc. The scheme is operated through post offices. There are two types of accounts, one of five years maturity value and the other of ten years maturity value. The interest on these deposits on maturity works to about 3.28 per cent. Any adult or two can open an account but it should not exceed Rs. 12,000 during the entire period. Withdrawals from the accounts are Allowed once during the currency of a five year account and twice in the case of a ten year account.

Small Savings Agencies.—In order to intensify the small savings campaign into a mass movement, Government have started various schemes which are in operation under executive instructions issued by the Government of India and the Maharashtra Government. The schemes are as follows:—

(1) Central Authorised Agency Scheme open to all citizens including Government servants, co-operative societies, scheduled banks and social welfare institutions.

(2) Internal Agency Scheme.

(3) Rural Agency Scheme.

(4) Primary Teachers Agency Scheme.

(5) Extra Departmental Branch Post-Master Scheme.

(6) Women's Savings Campaign Agency Scheme.

Besides these schemes individuals are also allowed to canvass the sale of twelve-year national plan savings certificates and ten-year savings deposit certificates on a commission basis at the rate of 1¼ per cent and 1/2 per cent, respectively.

In the following table statistics regarding gross and net collections of the various categories of small savings certificates described above in the district are given for the period from 1966-67 to 1968-69.

TABLE No. 22

Collections of small savings certificates in Akola District from 1966-67 to 1968-69

(Figures in rupees)

continued..

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