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Wednesday, February 26, 2014

Promotion of Small Savings

The Small Savings Schemes, carrying different terms and rates of interest administered by Government of India, are designed to provide safe and attractive option to all individuals who invest in these savings schemes. Banks have been given freedom by Reserve Bank of India (RBI) to fix their rates on domestic term deposits of various maturities. According to the information given to the Parliament recently, interest rates on Small Savings Schemes have been aligned with Government Securities rates of similar maturity with a spread of 25 basis points (bps) with two exceptions. The spread on 10 year NSC will be 50 bps and on Senior Citizens Savings Scheme 100 bps. The interest rates for every financial year are notified before 1st April of that year. Therefore, interest rates of Small Savings Schemes are not comparable with the rates being offered by the Banks for their various term deposit schemes. However, presently interest offered on Small Saving by Post Offices on all tenors is higher than the modal deposit rate offered by the Scheduled Commercial Banks (SCBs) on all tenors. 

The Parliament was informed that the Central and State Governments take various measures from time to time to promote and popularize Small Savings Schemes through print and electronic media as well as holding seminars, meetings and providing training to the various agencies involved in mobilizing deposits under various Small Savings Schemes. Further, with a view to sustaining investor’s interest in the Small Savings Schemes, the features of the schemes are reviewed from time to time and various improvements and amendments in the schemes are introduced. 

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