Concerned over the declining trend of the deposits in post office small saving schemes, the Ministry of Communications has requested Finance Minister P Chidambaram to revise the interest rate upward on these small saving schemes.
During 2007-08 (till the month of February), these 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 saving schemes attracted a total deposit of Rs 11,4673.90 crore (Rs 11,46.74 billion) against the total withdrawal of Rs 1,26400.31 crore (Rs 1,264. billion).
Among the different small savings schemes, investment in the saving certificate recorded an 18.63 per cent decline with the total deposit standing at Rs 19,289.99 crore (Rs 19,290 billion) compared with total withdrawal of Rs 22,885.61 crore (Rs 22,886 billion).
Similarly, negative growth of around 9 per cent was witnessed in post office saving bank schemes, excluding Public Provident Fund, where the total deposit for 2007-08 was just Rs 93,380.63 crore (Rs 933.81 billion) against a total withdrawal of Rs 1,02,143.75 crore (Rs 1,021.44 billion).
Senior postal officials say that with the banks and other financial institutions offering higher interest rate, post office saving schemes - once used to be a popular investment avenue for small investors - have now become unattractive and has been witnessing a negative growth trend in recent years.
Earlier, post offices offered an interest rate of 8 per cent compounded annually on monthly income schemes 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 5 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," an official said.
Concerned over the situation, Minister of State for Communication & IT Jyotiraditya Scindia requested Chidambaram to revise the rate upwards. "Large number of customers availing of these schemes are small investors in rural areas.
"They are being deprived of 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, these schemes will keep losing their attractiveness," he said.
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