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The Government has set up a committee headed by Deputy Governor, Reserve Bank of India (RBI) for comprehensive review of National Small Savings Fund (NSSF) Structure, interest rate, tenor and other administrative matters. The Terms of reference of the Committee include, interalia, review of the existing parameters for the small saving schemes, terms of lending to States and other related issues.
This information was given by the Minister of State for Finance, Shri Namo Narain Meena in a written reply to an Unstarred Question in Rajya Sabha today.
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The views expressed by Mr. S.Narayanaswamy, Mr. S.Raju and Mr. Nisban are quite relevant and deserve due consideration and deliberations by the committee. As the terms of reference of the committee include a review of the incentives offered on the small savings investments by the States, it may thus not be out of place to submit a few points regarding the paucity of the incentives offered to the agents as well as the small depositors for perusal of the members of the committee, all unfortunately drawn from the banking sector and the bureaucracy and none whatsoever fro those engaged in the development of the microfinance sector.
The service rendered by generations of innumerable agents mobilising the almost extinct national small savings for decades in the country even in the remotest areas has indeed been ignored. In fact, the advertisements inserted by the govt. in the national newspapers, vernacular journals and magazines, etc., during this period could never match the extent of the yeoman’s service and contribution, as the pioneer motivators, of these ill-remunerated, not-highly-qualified agents, including many ladies, in spreading the idea of small savings (including that of LIC policies in the nascent days of the insurance companies in India) among and educating the common people about the benefits of small savings.
In the context of the long strides made by our country on all fronts, it is really unimaginable that those poor people called agents, for paltry remuneration, would be traveling on foot or mostly on bicycles from door to door in areas dwelled by low income groups, and even the huts of domestic servants, labourers, petty traders and hawkers to propagate the idea of “microfinance” through the well-conceived concept of small savings in the post offices-no doubt as their livelihood. Even today, one finds a large number of these agents rendering unparalleled services to their clients – from personally collecting their tiny deposits at regular intervals, making the deposits, getting the entries made, reminding the clients on the maturity dates, helping them get the maturity amounts, and advising them on further investments-all without charging the clients or even expecting any extra remuneration for such services.
Many infirm, old people in bad health, with their prosperous oggsprings or less privileged ones, are selflessly helped by these unsophisticated agents who are at the beck and call of the depositors. And the treatment meted out by those working in postal department simply treat these agents as their domestic servants and expect regular cuts from the meager remuneration paid by the govt. to these agents. All this cannot be imagined from the so-called bankers, financiers, etc., who charge even for allowing clients to enter the precincts of their offices. It would be better if the committee takes these aspects into consideration too.
It would be a welcome idea to consider a scheme of pension for these agents-with so much subsidies and largesse for the so-called disadvantaged “communities” with a view to cornering their votes, some funds allocated for the benefit of these original and still the real motivators of small savings in the country may not be too much. At least not having regard to the CWG exrevaganza.
As regards the other term of reference, viz., review of the existing parameters for the small saving schemes in operation and recommend mechanisms to make them more flexible and market-linked, the committee can examine the possibility of giving these schemes the recognition due to the contribution once made by the small depositors in the wealth building (capital formation) of the economy in the 50’s through the 90’s. These investors, mainly from the lower strata of the economic scale, do certainly deserve better status in terms of being treated as account holders in banks and rewarded with facilities of ATMs, etc. More than this, however, what must be ensured is that, every village in the country even in the remotest corner must have centres to mobilise small savings of small people. The cooperative movement having largely failed (due to the greed of politicians and unscrupulous bureaucrats), the NSSCs/NSSF still can do wonders.
Unfortunately, and largely also due to wide-scale bungling by the govt. and the department inter alia with a most fragile interest rate structure, a most unresponsive structure of ill-trained/unprofessional manpower handling the scheme and (in most parts of the country) a disinterested and idle bunch of post office employees, the ideals behind this great scheme were totally lost sight of. “Small savings” was a movement, something that the chain of FMs and the totally irresponsible bureaucrats forgot. In the process, the great efforts made by the agents convincing small people of the benefits of the small savings schemes, mobilising huge funds into the coffers of the eschequer and truly ushering in the lively and widespread interest in what is called in technically fashionable jargon “micro finance” has been ignored. The agents are no more recognised, being paid commission at beggarly rates and people gradually losing faith due to eroding interest rates-traeting small savings schemes with the banking industry per se. Instead of appointing a committee of sophisticated, highly paid bureaucrats and some professionals used to the comforts of airconditioned living and working, social workers engaged in mobilising and pooling of “micro finance” ought to have been involved and public opinion invited. Why should our foreign-trained ecnomists must always and necessarily ape the US-model of economic growth instead of showing some amount of savings+investment-led development is not very clear, espacially in view of the large tracts of remote areas (not only those now inaccessible due to insurgency) where there has never been any evidence of any efforts made by the State to improve the living conditions of the marginalised, the forgotten and the rejects of the society-remembered only for purposes of being shown as having “voted”. Why cannot our intellectual giants of the “fashionable” and globe-trotting Left and Americanised Right alike find out an Indianised (desi) model of growth even now is a mystery. But, then, may be, that does not bode well with the IMF/World Bank/ADB!
Hence, this news raises serious doubts about the motives of the govt.
Yes, I agree with the views of Shri Narayanaswamy. In orderto reduce the interest burden, the Committee may recommend reduction in rate of interest payable on Small Savings Schemes(SSS). I suggest that by cutting down commission payable to the Agents and reducing the operational costs,the SSS can be made more attractive to the common people, ie., Senior citizens, Women, Rural public etc.,thereby encouraging small savings in Nation building.
dear all
since the govt has taken some belated action plan at least, now, the need for the hour is , whether , the interest etc , receivable , on such small scale invesments , do really help , the investors , rather than , a basket of tax savings. Really, the whole net worth, would have been ERODED fully, due to the high inflation , and many times, the return is awafully bad, in real terms. As such, the govt , should , allow , put option and call option, with a minimum period say 24 months, other wise, both the govt , and investors are the loosers. Then, what is the real need of the so called , many intermediate agents, pay back, commission etc, which is really increasing the cost of servicing such schemes awafully. The real need is , actually, do a computerised , system of , issue of such NSCs etc, and also , allow any investor, to get his return, from any place of his choice, and get the interests etc credited directly tothe dedicated account . Then only this will reallly be beneficial, other wise, we end up , one more scam , sooner or latter , depending upon the proficiency of the audit and other monitoring agencies , action strategy there on. Is it not real time , to appraise the govt and regulators , to look beyond the tax angle alone. i also request other learned professionals view point on this as well. with kind regards.