TelecomMin asks for revision in interest rate
Requests FinMin to revise interest rate on the small savings schemes
During the year 2007-08 up to the month of February, the post office small savings schemes witnessed a negative growth of around 10 per cent with the total amount of withdrawal surpassing the total deposits. During the period the post office savings schemes attracted a total deposit of Rs 11,4673.90 crore as against the total withdrawal of Rs 1,26400.31 crore.
Among the different small savings schemes, investment in the saving certificate recorded a sharp decline of 18.63 per cent with the total deposit standing at Rs 19,289.99 crore compared to total withdrawal of Rs 22,885.61 crore.
Similarly, negative growth of around 9 per cent was witnessed in post office savings bank schemes excluding Public Provident Fund (PPF) where the total deposit for 2007-08 was just Rs 93,380.63 crore against a total withdrawal of Rs 1,02,143.75 crore.
Senior postal officials say that with banks and other financial institutions offering higher interest rate, post office savings schemes which once used to be a popular investment avenue for small investors have now become unattractive and is witnessing a negative growth trend in recent years.
For instance earlier Post Office offered an interest rate of 8 per cent compounded annually on its Monthly Income Scheme (MIS) with a 10 per cent bonus on maturity. Postal officials say that two years ago the bonus was taken off making the scheme less attractive. Now they have again introduced the bonus at the rate of five per cent on maturity. We are demanding that the bonus be restored to the previous levels. Once it is done we are confident of bringing back our old customers.
Concerned over the situation, Jyotiraditya M Scindia, Minister of State for Communication & Information Technology, requested Union Finance Minister to revise the rate upwards saying that, "Large number of customers availing these schemes are small investors residing in rural areas and are being deprived off the financial benefits of higher rate of interest offered by banks and financial institutions. Unless the interest rate of small savings schemes are revised upwards, there may not be any change in the present situation due to which Post Office Small Savings Schemes will keep losing their attractiveness rapidly".