BANKING TRADE AND COMMERCE

SMALL SAVINGS

Small savings are investments which help the nation in defence and development. It is not a contribution or a donation or a subscription or a gift. It is just like putting money in a bank and getting the interest on it. Small savings is one of the schemes for raising money by borrowing internally to finance the Five-Year Plans of the country. The small savings movement was started in India in 1945.

Of the annual net target of Rs. 120 crores for the country, Maharashtra State was assigned the target of between Rs. 20 and 26 crores spread over the Third Five-Year Plan period and the target for Sholapur district was fixed at Rs. 166 lakhs.

Seventy-five per cent to eighty per cent of the investments in small savings used to be from urban areas in the initial stages of the movement. But now agriculturists are found to come forward in large numbers to invest in small savings. It is noteworthy that many villages received the honour of being called "bachat gram", i.e., village in which every household has a member who is a small saver.

The small savings programme received good response in this district in the Second and Third Five-Year Plan periods. The net collection in the Third Plan was Rs. 1,65,93,200 as against Rs. 1,55,71,000 in the Second Plan. The per-capita investment in small savings in the district rose from Rs. 1.55 in the Second Plan to Rs. 2.7 in the Third Plan. The reason for this seems to be the added facilities as regards the mode of small savings, as well as attractive rates of returns. The following categories of investments have been classified as small savings:—

(1) Post Office Savings Banks 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.

Post Office Savings Bank Deposits: The scheme constitutes the most important source for the collection of small savings especially from people of small means. The scheme is very much suited to the rural areas, where there are very little banking facilities. Post office savings account can be opened even with a small amount of Rs. 2. Thereafter even one rupee is accepted into the account and the maximum amount acceptable for single account holder is Rs. 15,000. The interest is paid at the rate of 3 per cent per annum.

The following figures show the position of the amount collected under post office savings bank accounts in the district during 1964-65, 1965-66, 1966-67 and 1972-73:—

(Rupees in lakhs)

The Twelve-Year National Plan Savings Certificates: A new series of twelve-year national plan savings certificates was issued by the Government of India with effect from June 1957. These certificates replaced the then seven-year and twelve-year national savings certificates and ten-year national plan certificates. They carry a higher rate of interest, viz., 6.25 per cent simple and 4.75 per cent compound interest at maturity, which is free of income-tax. The certificates are available at all post offices transacting savings bank business. The certificates are in denominations of Rs. 5, Rs. 10, Rs. 50, Rs. 100, Rs. 500, Rs. 1,000, Rs. 5,000, and Rs. 25,000.

The issue of national savings certificates was started from June 1957 in Sholapur district. The net investment in these certificates was plus Rs. 4.65 in the year 1964-65 but it was minus Rs. 6.60 and Rs. 5.37 lakhs in 1965-66 and 1966-67 respectively. It shows that the investment was minus during the two years under reference, while there were more withdrawals than investments in the respective years.

Ten-Year Defence Certificates: These certificates replaced the ten-year treasury savings deposit certificates. They carry a higher rate of interest, viz., 4½ per cent per annum. Deposits for the purchase of these certificates are accepted at all offices of the Reserve Bank of India, branches of the State Bank of India and its subsidiaries conducting Government treasury business and at all treasuries and sub-treasuries.

The certificates are issued in denomination of Rs. 50 and its multiples. An individual can invest a maximum of Rs. 35,000 while the limit for joint holders is Rs. 70,000. The interest is paid annually. Investment in these certificates is suitable particularly for those who want to keep their capital intact and to earn regular interest to finance normal recurrent expenditure.

The following statement gives the statistics of these certificates in the district during 1964-65, 1965-66 and 1966-67:—

(Rupees in lakhs)

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. These certificates are sold in multiples of Rs. 3,325 up to Rs. 26,600 and yield a handsome rate of compound interest spread over 15 years. They were issued from 2nd January 1958. These certificates are available at the same places where defence deposit certificates can be had. The net collection of these certificates in the district during 1965-66 and 1966-67 stood at Rs. 0.14 lakhs and Rs. 0.13 lakhs, respectively.

Cumulative Time Deposit: This scheme was started from 2nd January 1958. It facilitates small savers to save for specific purposes such as marriage, higher education, housing, etc. The scheme is operated through the post offices. Under this scheme any person can deposit every month Rs. 5, Rs. 10, Rs. 20, Rs. 100 or Rs. 200 at a post office for a period of 5, 10 or 15 years. The interest at maturity comes to about 3.3 per cent per annum compound on a five-year account, 3.8 per cent per annum compound on a ten-year account and 4.3 per cent per annum compound on a 15-year account. The following statement shows the amount collected in Sholapur district in 1964-65, 1965-66 and 1966-67:—

(Rupees in lakhs)

In the following statement are given the statistics of all types of small savings certificates for the period from 1964-65 to 1968-69 in the district:—

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