BANKING TRADE AND COMMERCE

SMALL SAVINGS SCHEME

The Small Savings Movement was started in India during 1945 with a view to 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 has been, therefore, trying to intensify Small Savings as a mass movement aimed at cultivating a national habit of thrift.

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.

(3) Ten-Year Treasury Savings Deposit Certificates.

(4) Fifteen-Year Annuity Certificates.

(5) Cumulative Time Deposit Scheme.

(6) Prize Bonds.

The post-office savings banks constitute the most important source for collection of small savings especially from people of small means. The agency of the post-office savings banks is very much suited to the rural areas 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 net-work of offices spread throughout the country and could be developed without incurring any considerable expenditure.

Kolaba district is served with a large net-work of post-offices. At present there are as many as 74 post-offices in the district most of which do savings bank work. An increase in their number especially in the rural parts of the district, would encourage an expansion in savings in the future.

The post-office savings scheme is one in which even the poorest can participate. A person can open his account with Rs. 2 at any post-office which does savings bank work. An account may be opened by an individual himself or by two persons, jointly payable to (i) both or (ii) either. Interest allowed for this deposit on individual and joint account is 2½ per cent, for the first 10,000 rupees and 2 per cent, on the sum exceeding that amount. The maximum amount an individual can deposit is Rs. 15,000. The same facilities are accorded to non-profit making institutions and co-operative societies. The Small Savings Movement thus afford the cheapest facility to every citizen to contribute his humble mite to national development.

Twelve-Year National Plan Savings Certificates.

These certificates have been issued by the Government of India with effect from June, 1957. They 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. The interest begins to accumulate after the second year. Investment in these certificates can be made to a limit of Rs. 25,000 individually or Rs. 50,000 jointly (two adults). Registered co-operative societies, local authorities, land mortgage banks, charitable, religious, educational or other institutions, donations to which are exempt from payment of income-tax, can invest up to Rs. 1,00,000. There is no limit for investing Provident Fund amounts in these certificates. Another advantage is that the certificates can be transferred to a near relative "for natural love and affection" (even within one year). The certificates are available in denominations of Rs. 5, 10, 50, 100, 500, 1,000 and 5,000 and can be purchased from any post-office doing savings bank work.

Ten-year Treasury Savings Deposit Certificates, bearing income-tax free interest at 4 per cent, per annum can be purchased at offices of the Reserve Bank of India or the State Bank and branches of the State Bank of Hyderabad. They are available also at all treasuries and sub-treasuries where there are no offices of aforesaid banks.

These certificates are sold in multiples of Rs. 50 and yield an income-tax free interest at 4 per cent, per annum, payable at the end of every year. If the amount invested is withdrawn before the full maturity period of 10 years, then a certain discount has to be paid. The highest amount of discount in any year is only Rs. 6¼ on Rs. 100 invested.

The investment in these certificates can be made by cash or by cheque. The maximum amount that can be invested depends upon whether the investor is an individual or an institution. This scheme is best for those who wish to keep their investment or capital intact.

The figures of receipts of these certificates at Kolaba Treasury and Sub-Treasuries and also at the State Bank, Alibag indicate the nature of investment in these certificates.

During the period from 1951 to 1958 receipts at Kolaba Treasury and Sub-Treasuries were as follows:―

The total receipts at the State Bank of India, Alibag from 1956-59 amounted to Rs. 38,400.00.

Fifteen-Year Annuity Certificates.

This is an ideal scheme for investing accumulated savings in a lump-sum. The annuity certificates yield a regular monthly income for the investor. The amount invested in these certificates is refunded together with compound interest of 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. Investments in Fifteen-Year Annuity Certificates are available for a single adult, two adults jointly and a guardian on behalf of a minor. Institutions, corporations and firms cannot make investments in these certificates.

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 a maximum of 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 at Bombay, Calcutta, Delhi, Madras and Bangalore. He can also keep the certificates with the Public Debt Office for safe custody and get monthly return over it.

During the period of three years from 1954-55 to 1956-57, the receipts of these certificates at Kolaba Treasury and Sub-Treasuries amounted to Rs. 94,500.00.

Cumulative Time Deposit Scheme.

In order to encourage the habit of regular savings of small amounts which could be useful on specific occasions like marriage, education of children, building of a house, etc. Government have introduced, with effect from 2nd January 1959, a scheme called the 'Cumulative Time Deposit Scheme' within the framework of the 'Post Office Savings Bank.'

A Savings Bank account can be opened at a post-office by a single adult or two adults jointly, payable, to both jointly or either of them or a guardian on behalf of a minor or a lunatic. There are two types of accounts-one of five years maturity value and the other of ten years maturity value. The interest for a monthly deposit of Rs. 10 in a 5-year account works out at about 3.30 per cent, at maturity while for a monthly deposit of Rs. 10, it works out at about 3.80 per cent, at maturity. The interest is free of income-tax and super-tax. Any adult or two can open an account but it should not exceed Rs. 12,000 during the entire period. Withdrawals of sums in multiples of Rs. 10 totalling not more than 50 per cent, of the deposits made into the accounts are allowed once in the case of a 5-year account and twice in the case of a 10-year account, after the account has been in operation for at least one year. The amount withdrawn will be deducted from the amount payable under the account, together with simple interest thereon at 6 per cent, per annum. The scheme has been put into operation in the district very recently and the investments in it have not amounted to any considerable significance.

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