The Hindu : Tamil Nadu News : Setback to small savings scheme

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Friday, Aug 01, 2008
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Tamil Nadu

Tamil Nadu

Setback to small savings scheme

Special Correspondent

NAGAPATTINAM: With the offering of a higher rate of interest for term deposits by the commercial banks than that for National Savings Certificates (NSCs), the Small Savings department has suffered a major setback in achieving the target in the districts.

A senior official of the department told The Hindu on Thursday that nobody was coming forward to invest in the NSCs in the last two years because of the low rate of interest at eight per cent per annum and the NSCs were getting matured only after seven and a half years. Besides, the incentive offered on the NSC deposits had also been withdrawn a few years ago.

Nagapattinam district had achieved small savings deposit of only Rs.38.22 crore during 2007-08 against the target of Rs.183 crore. The same target has been fixed for the current year. As nobody is interested in investing in the NSCs, the officials of the Small Savings department are now approaching the Government employees to open compulsory recurring deposits with post offices.

Official sources said that RDs were the only source for the small savings in the district and hoped to achieve at least 50 per cent of the small savings target of Rs.183 crore this year in the district. All the Government employees have started opening RD accounts for a period of five years and each employee is depositing Rs.100 to Rs.5,000 per month.

Purchasing NSCs was a profitable one till a few years ago for the income tax payers, particularly the salaried class. But in the last two years, people preferred tax-saver deposits with the commercial banks with a lock-in period of five years and get nine per cent interest per annum which is one per cent more than the interest offered in NSCs.

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