The Hindu : Tamil Nadu News : Phenomenal growth in investments

Online edition of India's National Newspaper
Friday, Nov 05, 2004

Tamil Nadu

Tamil Nadu

Phenomenal growth in investments

By T. Ramakrishnan

CHENNAI, NOV. 4. The Postal department has been witnessing a phenomenal rise in the volume of small savings in the Tamil Nadu circle.

In 10 years, the number of accounts under various schemes operated through post offices (in the State circle including Pondicherry) has risen by more than 55 per cent. The increase in value was 738 per cent between 1994-95 and 2003-04. In the same period, investments in savings certificate schemes (Kisan Vikas Patrika and six-year National Savings Certificate-VIII issue), increased by around 70 per cent. All these despite a reduction in interest rates at regular intervals.

Savings bank account, monthly income scheme, recurring deposit, time deposit and public provident fund are among the schemes offered by post offices.

Though postal savings schemes have been attracting more investors in other States too, the increase is more pronounced in Tamil Nadu. "Mobilisation here is on a par with what it is in Maharashtra and Gujarat, other industrially-advanced States," says Vatsala Raghu, Chief Postmaster-General, Tamil Nadu Circle.

Reach of network

Reasons are not far to seek. "People are sure that the money they invest in post offices will be safe and secure," she says. The reach of the network is another critical factor.

The degree of security assumes importance in Tamil Nadu, where numerous non-banking financial companies and Nidhi firms crashed in the last 10 years, particularly since 1996. Besides, two important government-controlled financial institutions, one of which is headquartered here, went through a lean patch in this period.

A financial analyst says a couple of capital market scandals in the last decade forced investors to turn to postal savings schemes. It is high time the department converts itself into a holding bank, he says. Certain legal requirements must be met for the department to become a full-fledged banking institution and greater technology induction and upgrading must done. At present, records for most of the accounts under the small savings schemes are maintained manually. Only now the focus is on completion of computerisation of records in metropolitan cities. Technology upgrading becomes crucial with the possibility of banks entering the small savings sector.

Realising the scope of extending the department's activity in banking/financial services, the Tamil Nadu Circle designed and implemented last year the concept of opening financial marts in different places. This year too, marts will be opened in half-a-dozen places where postal employees will market banking and insurance products and provide counselling to investors.

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