BANKING TRADE AND COMMERCE

SMALL SAVINGS

The commencement of the small saving scheme dates as far back as World War I, when the then Government had issued Postal Cash Certificates having a maturity period of five years. This scheme continued for some time in the post-war years. During the World War If Government started the scheme of Post-office National Savings Certificates in 1943, with a view to counteract inflation by withdrawing a part of increased purchasing power from the people, and also to serve as an additional source of war finance. After Independence small savings were regarded as one of the important schemes for raising money internally to finance the ambitious Five-Year Plans of the country.

The various categories of small savings are given below:-

(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 and

(5) Cumulative Time Deposit Scheme.

Of these the Post-office Savings Bank Deposits form 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 where there are little banking facilities. Moreover, as an agency of the Government, it enjoys complete confidence of the people. In 1962-63, there were 99 post-offices doing savings bank work in Sangli district. The following statement gives the amounts deposited in these banks and the amounts withdrawn from them:-

TABLE No. 18

STATISTICS OF THE WORKING OF POSTAL SAVINGS BANKS, SANGLI DISTRICT

Twelve-year National Plan Savings Certificates.-These Certificates were introduced with effect from June 1957 when the then existing Seven-Year and 12-year National Savings Certificates and 10-year National Plan Certificates were discontinued.

They yield an income-tax free simple interest of 5.41 per cent and compound interest of 4.25 per cent at maturity, i.e., at the end of 12 years. They are encashable even before maturity except for an initial period of 18 months. The Government thereafter introduced five and seven years series (which were also encashable before maturity) yielding the rate of 3 per cent and 3 4/7 per cent, respectively, at full maturity. The following statement shows the amount of savings invested in the Twelve-year National Plan Savings Certificates from 1958-59 to 1961-62:-

Ten-year Treasury Savings Deposit Certificates.-The scheme of Ten-year Treasury Savings Deposit Certificates was started in 1951. These Certificates are sold in denominations of Rs. 50 and investment in them can be made by cash or cheque. The maximum that can be invested depends upon whether the investor is an individual or an institution. The interest at the rate of 4 per cent is paid annually on the completion of each period of twelve calendar months from the date of deposit. The certificates are exempt from income-tax, can be hypothecated and can be encashed before they reach maturity.

The aggregate figures of total subscriptions received in Sangli district for these Certificates are given in the following statement: -

Fifteen-year Annuity Certificates.-These certificates were issued from 2nd January, 1958. They are sold in multiples of Rs, 3,325 up to Rs. 26,600 and yield the amount together with compound interest of approximately 4.25 per cent every year by way of monthly payments, spread over 15 year. An annuity certificate can now he had for Rs. 1,330 yielding an annuity of Rs. 10 per month for 15 years. The amount thus received is free from income-tax or super-tax. The investment in this scheme serves a double purpose. It provides a sale, secure and profitable avenue for a lump sum investment of accumulated savings of a person and also ensures a regular monthly income to him. These investments, however, are available only 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 following table gives the details of the subscriptions received at the branches of the State Bank of India at Sangli and Mirai, respectively:-

Cumulative Time Deposit Scheme.-The Government has introduced this scheme within the framework of the Post-office Savings Bank from 2nd January 1958. This was done with a view to encouraging the habit of regular savings of small amounts which could be useful on specific occasions like marriage, education of children, building a house, etc. The scheme was revised in 1962 to make it more attractive for salaried persons. There are three types of accounts, viz., 5-year, 10-year and 15-year. A person may deposit up to Rs. 200 per month in the first two types and up to Rs. 300 in the 15-year account. Deposits can be made in fixed denominations of Rs. 5, 10, 20, 50, 100, 200 and 300 subject to the limits for individual and joint accounts for each type. The total deposit during the entire period of the accounts is not to exceed Rs. 54,000 in the case of an individual's account or Rs. 1,08,000 in the case of joint accounts. Withdrawals of sums in multiples of Rs. 10 totalling not more than 50 per cent of the deposits made into the account are allowed once in the case of a five-year account, twice in the case of a 10-year account and thrice in the case of 15-year account, after the account has been in operation at least for one year.

The Government of India have now allowed to holders of Fifteen-year Annuity Certificates (I and II series) the facility of surrendering their certificates at any time after a period of 12 months from the date of deposits and obtaining the commutation value thereof. This facility was made available from 1st October, 1962.

Since the declaration of national emergency in 1962 small savings have been turned towards defence purposes. Accordingly certain changes were introduced in the schemes mentioned above. The Twelve-year National Plan Certifcates, the Ten-year Treasury Saving Deposit Certificates and the Fifteen-year Annuity Certificates were changed into Twelve-year National Defence Certificates, Ten-year Defence Deposit Certificates and the Fifteen-year Cash Annuity Certificates, respectively. Their rates of interest were also raised to Rs. 6.25, Rs. 4.50 and Rs. 4,25 (compound) per annum, respectively.

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