BANKING TRADE AND COMMERCE

SMALL SAVINGS SCHEME

Small Savings is one of the schemes for raising money by borrowing Schemes. internally to finance the Five-Year Plans of the country. The scheme also aims at meeting the needs of expenditure on defence. It thus serves the dual purpose of helping the defence and development of the country. At the same time it benefits the investor in realising the interest entirely free from any tax and getting welfare benefits of the plan.

The Small Savings scheme was started as a movement in India in 1945 with the intention of mopping up surplus purchasing power to fight the inflationary forces in the post-war years. The Planning Commission later on relied on it as an important means to finance its. expenditure on capital schemes included in the Five-Year Plans. With the out-break of Sino-Indian war, the scheme has also been employed for building up the defences of the nation.

The Small Savings include the following categories-

(1) Post-Office Savings Deposits,

(2) 12-year National Defence Certificates,

(3) 10-year Defence Deposit Certificates,

(4) 15-Year Annuity Certificates,

(5) Cumulative Time Deposit Scheme.

Of these, the Post Office Savings Banks are an important source for the collection of small savings, especially from people of limited incomes. A saving bank account can be opened with a minimum deposit of Rs. 2 and subsequent deposits may be as low as Re. 1. The deposits earn interest at Rs. 4 per cent, per annum, free of income tax. on balances upto Rs. 25,000 in case of individual accounts and Rs. 50.000 in case of joint accounts. By 1964 there were as many as 28 sub-post offices and 72 branch offices doing the savings bank's work in the district. The accompanying table gives the details of their work including the investments, the net withdrawals and the bank balances even year from 1961-62 to 1963-64.

TABLE No. 14

STATISTICS OF THE POSTAL SAVINGS BANKS IN DHULIA DISTRICT
(FROM 1961-62 TO 1963-64)

10-year Defence Deposit Certificates

These certificates have replaced the old ten year Treasury Savings Deposit Certificates which carried a 4 per cent interest free of income tax. The certificates are issued in denominations of Rs. 50 and multiples thereof and earn 4.5 per cent interest annually free of income-tax. They are available from all offices of the Reserve Bank of India, branches of the State Bank of India and its subsidiary banks, treasuries, sub-treasuries and Head and Sub-post offices.

The following statement gives the total subscriptions under both the Treasury Savings Deposit Certificates and Defence Deposit Certificates in Dhulia district from 1960-61 to 1962-63 and 1962-63 to 1963-64, respectively.

15-Year Annuity Certificates.

These certificates are available in denominations of Rs. 1.330,  Rs. 3.325 Rs. 6,650, Rs. 13,300 and Rs. 26,600 and guarantee a monthly payment, free of income-tax, of Rs. 10; 25; 50; 100 and 200 respectively for a period of 15 years. The return works out at 4.25 per cent. per annum compound. These certificates can be got from where the T. S. D. certificates are available. Investment in them ensures a steady income every month of a specific amount for 15 years. If the investor passes away during this period, the monthly annuity amount is paid to his legal heir. In case of joint holders, on the death of one, the monthly payment is made to the survivor. Till August 1965 the total subscriptions received from Dhulia district under the 15-year annuity certificates amounted to Rs. 1,58,480.00.

12-Year National Defence Certificates

These certificates are issued in denominations of Rs. 5, Rs. 10 Rs. 50, Rs. 500, Rs. 1000, Rs.5,000 and Rs. 25,000 They are available at all post offices transacting savings bank business. The rate of interest carried by them is 6.25 per cent per annum simple at maturity and 4.75 per cent per annum compound. The interest, which is free of income-tax, begins to accumulate after the second year. Figures of total collections under these certificates are not available as these certificates have been introduced only recently.

The 12-year National Defence Certificates have replaced the 12-year National Plan Savings Certificates issued by the Government of India with effect from June 1957. The latter certificates yielded on maturity a return of 5.4 per annum simple interest and 4.25 per cent, per annum compound interest. The net collections under these certificates from 1961-62 to 1963-64 are as under:-

It should, however, be recalled that even prior to the introduction of 12-Year National Plan Savings Certificates the Government had introduced 7-Year and 12 Year National Savings Certificates and the 10-Year National Plan Certificates. These certificates were discontinued with effect from June 1957. The investments in these certificates and the withdrawals from them from 1961-64 were as under: -

The cumulative Time Deposit Scheme.

This scheme was started with effect from 2nd January, 1959. It gives opportunity to small savers to provide for specific purposes such as marriage, education of children, building a house, etc. Under the scheme a deposit of Rs. 5, 10, 20, 50, 100 or 200 can be made at a post office every month for a period of 5 years, 10 years or 15 years. The limit on maximum monthly deposit is placed at Rs. 200 in case of a 5-Year or 10-Year deposit account and Rs. 300 in case of 15-Year deposit account. The total deposits during the entire period of the accounts shall not exceed Rs. 54,000 in case of single account and Rs. 1,08,000 in the case of joint accounts.

The return on cumulative time deposits is free of income-tax. The interest at maturity works out to about 3.3 per cent per annum compound on a 10-Year account and 4.3 per cent per annum on a 15-Year account.

In case of defaults in making regular payments, the date of maturity of the account is extended by the number of months for which defaults have occurred subject to a maximum of five defaults in a 5-Year account and ten defaults in a 10-Year account.

The deposits made into the 10-Year and 15-Year Cumulative Time Deposit accounts count for rebate of income-tax in the same manner as contribution to Provident Fund and Life Insurance premia and subject to the same limits. The total investment in these deposits in this district is not available.

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