FINANCE

SMALL SAVING SCHEMES

The Small Savings Movement in India is of recent origin. It was started during 1945 as a method or mopping up purchasing power to light 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 intensity small savings as a mass movement aimed at cultivating a national habit of thrift. To-day, of all the target resources of the Second Five-Year Plan, such as taxation, open market operations, borrowing, small savings, etc., small savings can be considered to be the most effective mode of mobilising co-operative sacrifices of the people in a democratic and economically the least painful way. Small Savings are thus a mighty adventure of building up a happy and prosperous India.

Trend in small savings,

Small savings collections are closely related to the general price level. The fall in the general level of prices and the cost of living seem to have fairly contributed towards improvement in the collections during the First Five-Year Plan. While the general index of wholesale prices fell from 434 in 1951-52 to 360 in 1955-56 the net collections rose from about Rs. 14 crores in 1951-52 to Rs. 17 crores in 1955-56 in the areas of the reorganised Bombay State in conformity with the target figures laid down by the planning authorities. This net target was fixed after taking into consideration the net collections secured in the past, the crop conditions as well as the contributing capacity of the rural areas and the industrial development of this district.

Categories of small savings.

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 the most 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. To-day the post office savings banks provide a large network of offices spread throughout the country and are capable of being developed without incurring considerable expenditure. Savings bank activity constitutes 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 extensive net-work of post offices is spread throughout the district. In 1957 there were under the head office of Jalgaon 32 departmental sub-offices, three E. D. sub-offices and 44 branch offices doing savings bank work. Following table gives an account of the business operations of the savings banks in the district: —

Post Office Savings Banks:—

TABLE No. 11

NUMBER OF ACCOUNTS AND AMOUNT INVESTED IN POST OFFICE SAVINGS BANKS, JALGAON DISTRICT.

The post office savings scheme is one in which even the poorest can participate. 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 (i) 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. The small savings campaign is thus the most genuine socialistic resource of the Five-Year Plan extending the cheapest facility to every citizen to contribute his humble mite towards the programme of national development.

The 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 compound 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.

In the Jalgaon district the issue of Twelve-Year National Savings Certificates was started from June 1957. The initial investment was only Rs. 35. but it increased to Rs. 1,20,390 in September. By the end of the year, the total investment was to the tune of Rs. 1,35,050.

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 or the State Bank and branches of the State Bank of Hyderabad and the Bank of Mysore. They arc 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 and investment in the same can be made by cash or by cheque. The maximum that can be invested differs according as the investor is an individual or an institution. 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 have other advantages also. They 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 per 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 and super-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. The investor can draw this monthly payment at any treasury or sub-treasury, in India or at any of the Public Debt Offices in Bombay. Calcutta. Delhi. Madras and Bangalore. He can also keep the certificate with Public Debt Office for safe custody and get monthly return over it. The total amount subscribed towards these certificates approximated only to Rs. 3,325 till June 1959.

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. The amount of withdrawal should not exceed 50 per cent of the total amount of deposits made and the account must have been in operation for more than a year. The amount withdrawn will be deducted from the amount payable under the: account, together with simple interest thereon of six per cent, per annum.

Small Savings Agencies.

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

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

(2) The Internal Agency Scheme.

(3) The Rural Agency Scheme.

(4) The Primary Teachers' Agency Scheme.

(5) The Extra-Departmental Branch Post Master Scheme.

(6) Women's Savings Campaign Agency Scheme.

Besides there schemes individuals arc also allowed to canvass the sale of Twelve-Year National Plan Savings Certificates and T. S. D. Certificates on a commission basis at the rate of l¼ per cent and ½ per cent, respectively.

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