Small savings agents stare at life sans income

                   MUMBAI: Chetna Lodaya, a 53-year-old cancer patient from Ghatkopar, a suburb in eastern Mumbai, has been earning a living selling small savings schemes. She now wonders how she will run her household, which includes three children, with the government discontinuing commissions on most small saving schemes with effect from December 1. Sunil Naik followed in his retired father's footsteps of selling schemes like Public Provident Fund (PPF), Senior Citizen Scheme, Monthly Income Scheme (MIS), National Saving Certificate (NSC) and Kisan Vikas Patra (KVP). His agency thrived to such an extent that his wife quit her job to help him. Naik has a client base of over 500. Being the only earning member , nearly 10 family members are dependent on his earnings. Now overnight the family has been rendered without a livelihood.

Jiten Ashar, a 35-yearold with disabilities, has been using the services of a courier company to send documents . With commissions on most schemes being dropped and NSC commissions being halved, there is no way he can even cover his costs.

These are among the lakhs of agents, who are solely dependent on commissions from sales of small savings schemes for a living, who have been left high and dry following the government order. From December 1, agent's commission of 1% for PPF schemes and 0.5% on Senior Citizen Savings Scheme has been discontinued. On other schemes-MIS and NSC-the commission has been cut to 0.5% from 1%. Last month, the government increased interest on small savings schemes and hiked the investment limit on PPF to Rs 1 lakh from Rs 70,000 to revive dwindling subscriptions to these schemes. However, pressed for funds the government has decided to cut commissions.

"I get calls from clients telling me that their PPF cheque for Rs 1 lakh is ready but I do not have the heart to refuse as there is the need to maintain relationship," says Nayak. According to agents, it is unlikely that the government will meet its objective of increasing collections under small savings schemes as individuals are not likely to make the effort to go out and stand in queue. "These days everyone wants a doorstep service. If you go through the forms with the post office hardly a handful of them will be from direct applicants," says Ashar.

Sanjay Parekh, general secretary, Small Saving Agents' Welfare Association, said that a representation has been made to the government . Unfortunately the government order has come just before the busy season for the agents since the last quarter is when most taxpayers look at government schemes. There is not much of an option in other financial products . Mutual fund distribution as a profession is dead with Sebi discontinuing entry loads on mutual funds from 2009. Insurance agency has also lost its attraction after IRDA decision to cut charges and insist on productivity limits for agents.

Source : The Times of India, December 2, 2011