BANKING TRADE AND COMMERCE

SMALL SAVINGS.

The Small Savings Movement was started in India in 1945 with the intention of mopping up purchasing power to fight the inflationary forces in post-war years. The Planning Commission later on found it to be an important means whereby it could finance its expenditure on capital schemes included in the Five-Year Flans. The Government of India has been, therefore, trying to intensify Small Savings as a mass movement aimed at cultivating a national habit of thrift.

Following categories of investments have been classified as Small Savings investments: —

(1) Post Office Savings Certificates.

(2) 12-Year National Plan Savings Certificates issued from 1st June, 1957 including past holdings of 12-year and 7-year National Savings Certificates as well as 10-year National Flan Certificates issued before June 1957.

(3) 15-Year Treasury Savings Deposit Certificates issued from 1st June 1957 including past holdings of Treasury Deposit Certificates issued before that date.

(4) 15-Year Annuity Certificates.

(5) Cumulative Time Deposit Scheme.

Post Office Savings Banks.

The Post Office Savings Banks constitute by Far the most Important source for the collection of Small Savings especially from people of small means. The agency of post-office savings banks is well 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. Keeping savings banks accounts constitutes one of the functions of the post-offices and can. therefore, be carried on economically which is not possible in case of other banking institutions.

On 1st September 1958 there were in all 94 Post-office Savings Banks functioning in the Satara district. The following statement shows taluka-wise distribution of Post-office Savings Banks in the Satara district.

The total number of accounts held at these banks during the three years 1955-56 to 1957-58 are given below: —

TABLE No. 12.

This table shows that since 1955 the total number of accounts with the. Post-office Savings Banks has remained steady. The. amounts of investment also do not show a substantial rise. It has, therefore, become necessary to increase the number of Post-office Savings Banks especially in the rural parts of the district with a view to encouraging 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, on the sum exceeding this 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 Scheme, thus affords the cheapest facility to every citizen to contribute his humble mite to national development.

Office-bearers of medical, educational, religious, charitable, and other non-profit making institutions can open such accounts as well as co-operative societies and local authorities like district local boards, panchayats and municipalities. There are no limits to the amount of investment by such institutions in their accounts with Post Offices. It is desirable in the national interest that all non-profit-making institutions keep their surplus funds in the Post-Office Savings Banks. Commanding Officer of a unit. District Superintendent of Police, Chairman or President of a district board or a municipality may open a single account, called the " conjoint account " on behalf of employees under them. In all the cases withdrawals are permissible twice a week.

12-Year National Plan Savings Certificates.

A new series of 12-year National Plan Savings Certificates have been issued by the Government of India with effect from June 1957. The then existing 7-Year and 12-Year National Savings Certificates and 10-Year National Plan Certificates were discontinued.

These 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. Besides this, these new certificates have certain other advantages. They have protection from loss or damage; they are very liquid and they carry a high degree of security.

In Satara district the total amount of investment in the 12-Year National Savings Certificates was Rs. 4,91,920 in 1955-56, while the amount of withdrawals during the same year was Rs. 1,33,510. During the successive years, that is, in 1956-57 and 1957-58 figures of investment were Rs. 5,72,490 and Rs. 1,99,775 while that of withdrawals were Rs. 1,66,790 and Rs. 4,60,625 respectively. Thus, it can be seen that while the amounts of investment have shown a considerable decrease, the amounts of withdrawals have risen quite substantially.

10-Year-Treasury Savings Deposit Certificates.

Ten-Year Treasury Savings Deposit Certificates bearing an income-tax free interest at 4 per cent, per annum can be purchased at the offices of the Reserve Bank of India or State Bank or their branches. They are available at all treasuries and sub-treasuries where there are no aforesaid offices of 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 cheque. The maximum that can be invested varies 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 earn regular annual interest for normal recurrent expenditure. The certificates have other facilities, too. They are exempt from income-tax, can be hypothecated and can be encashed before the date of maturity, with due allowance for discount. The total amount invested in these certificates during a period of seven years 1951-1952 to 1957-58 was Rs. 1,70,700.00.

The following table gives year-wise figures of total subscriptions received for 10-Years Treasury Savings Deposit Certificates from 1951 to 1958.

TABLE No. 13.

15-YearAnnuityCertificates.

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. This type of investment is very suitable for those who are not in pensionable services and who want to ensure for the future from what they have in hand. 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 15 years. The amount paid to the investor each month is free of income-tax and super-tax.

The 15-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 monthly payment can be drawn at any treasury or sub-treasury in India or at any of the Public Debt Offices at Bombay, Calcutta, Delhi, Madras and Bangalore. The investor can also keep the certificates with public Debt Office for safe custody and get monthly return over them.

15-YearAnnuityCertificates.

Investment in 15-Year Annuity Certificates ensures a steady income every month of a specific amount for a period of 15-years. If the investor passes away during this period, the monthly annuity amount may be paid to his legal heir. In case of joint holders, on the death of one, the monthly payment is made to the survivor. In no case the balance of investment is refunded in a lump sum. Jointly one can invest upto a sum of Rs. 53,200.

The 15-Year Annuity Certificates did not receive much popular support in Satara district. The total investment in these certificates during eight years 1951-1958 was Rs. 10,500 only; Rs. 3,500 in 1954-55 and Rs. 7,000 in 1955-56.

Cumulative Time Deposit Scheme.

The Cumulative Time Deposit 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. The scheme works within the framework of the Post-Office Savings Bank.

There are two types of accounts, viz., 5-Year account and 10-Year account. An account can be opened at any post-office by a single adult or two adults jointly, payable, to both jointly or either of them. Deposits can be made in fixed denominations of Rs. 5, Rs. 10, Rs. 20, Rs. 50, Rs. 100 or Rs. 200, subject to the limits for individual and joint accounts for each type. Thus, a person may deposit upto Rs. 100 per month in a 10-Year account provided that the total of the deposits made during the entire period of his account or accounts (where he has more than one account) shall not exceed Rs. 12.000, exclusive of amounts withdrawn. A depositor can have more than one account in his or her name or jointly with another. In case of joint account, the limits specified above will be doubled. The depositor may deposit Rs. 200 per month in a 5-Year Deposit account. 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 5-Year account and twice in the case of a 10-Year account, after the account has been in operation at least for one year. The amounts withdrawn, with simple interest thereon at 6 per cent, per annum will be deducted from the amounts payable under the account. The interest on the deposits at maturity works out to about 3.3 per cent. on a 5-Year account and 3.8 per cent. on a 10-Year account. The interest is free of income-tax and super-tax.

In case of regular payments not being made, 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. If the period of defaults exceeds this number, the accounts shall be treated as " discontinued" and proportionate amounts will be paid after the expiry of the period for which the accounts stand. During the initial period there does not seem to be any investment made in this new type of scheme. Even considering the resultant investments both in the Post Office Savings Banks and the National Savings Certificates and National Plan Savings Certificates, the investment position comes to Rs. 16 lakhs, Rs. 10 lakhs and Rs. 12 lakhs respectively. This definitely indicates that the investment capacity of the people in this district for the year 1957-58 though slightly above that of the year 1956-57. has fallen much below the one obtaining in the year 1955-56.

Prize Bonds.

They are a new form of Government security introduced from 1st April 1960. They are different from other securities in that, interest is not paid on them but is pooled and distributed as prizes drawn by lot every quarter. As this is an entirely new scheme, figures of the amounts of investment in them are not available at present.

Small Savings Agent.

In order to intensify the small savings campaign into a mass move-ment the Government has started various schemes which are in operation under executive instructions issued by the Government of Maharashtra and Government of India. 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 Primary Teacher's Agency Scheme.

(4) The Rural Agency Scheme.

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

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