Thursday, October 24, 2013

Small increase in small savings

Dear Comrades,

NAGPUR: The Sensex may have spiralled to the 21,000 points level in the last one month, but small investor seems to have preferred small savings instead. After going through one of the worst cycles during the last two years, finally some money has been retained in these schemes, mostly sold through post offices.

Popularly known as the post office savings schemes, these are managed through National Savings Institute (NSI), which has its headquarters in the city. However, even as NSI may be encouraged by the trend, there is also a matter of concern. Two years ago, post offices were brought under the know your customer (KYC) norms, to prevent money laundering. But inspections by NSI have found that only 2% of the post offices inspected so far are complying with the norms.

According to the latest figures compiled by NSI, gross collections this year stand at Rs 79,918 crore. The net amount retained in the schemes after deducting withdrawals comes to Rs 2,829 crore. During the same period last year, gross collections were almost similar, at Rs 79,692 crore, but Rs 83,389 crore were withdrawn from the schemes, leaving a negative balance.

NSI is hopeful to end on a positive note this year. The top selling plans so far are post office time deposits, monthly income scheme (MIS), recurring deposits and public provident fund (PPF). The last five years were the worst for NSI, when the withdrawals often exceeded collections. This has happened last two years in a row, said sources.

However, what is worrying NSI is that even as the government feels that post offices may also be a safe haven for stashing unaccounted wealth, despite the KYC norms being put in place, not much could be achieved on this front. NSI has been appointed as the agency to monitor KYC compliance. However, inspections till date have revealed that only 2% of the post offices have been able to fully comply with the norms.

Sources say, KYC does not mean only taking down the depositors' address proof and photo identity. Quite a few returns have to be filed with the ministry of finance (MoF). For example, the number of transactions above Rs 10 lakh have to be reported. Even if there are none, nil returns have to be filed. But only 2-5% of the post offices were found filing such returns.

At the same time, the depositors' permanent account number (PAN) has to be noted down for all deposits over Rs 50,000. But post offices have failed on this count, said sources.

In some cases, it was found that agents have not issued receipt for deposits received. Each time funds are deposited into a scheme a receipt has to be issued. It is the agent's responsibility if the funds are routed through him.

Related Posts Plugin for WordPress, Blogger...
Related Posts Plugin for WordPress, Blogger...
Related Posts Plugin for WordPress, Blogger...