Investment of NPS amount and it's return ?

Dear Comrades,

One of our young comrade Sujit Panda has raised some queries regarding the future of N P S. Perhaps everyone is well aware of the fact that Govt. of India has earlier introduced CPF and subsequently implemented it as NPS for the retirement benefits of the employees joined to Government service after 1st April 2004. Com. Sujit has monitored the procedure through which NPS amount is being invested by the Govt and gone through the outcome. The volatile conditions of the stock/share market is clear to all. As on the present date with the share of investments in SBI/UTI/LIC (as per the norms of NPS) the position is not good enough to return a promising value. The utilisation and investment of our money needs to be reassessed and for that union requests all of you to share your views and send your suggestions to our email id so that we can make a review of it and send our legitimate demand to CHQ with necessary details for initiating any fruitful action so that our hard earned be invested very carefully to give us a good return.

Thanks to the electronic and print media for their coverage

Dear Comrades,

The electronic and print media of Jeypore has also encouraged our spirit by taking coverage of our DWC meeting held on 12.6.2011 by publishing the same in the news paper and broadcasting through the news channel. The following news paper cuttings are published hereunder for information.

The Samaj

Khabar

 Dharitri

DPC RESULT DECLARED FOR MTS AND POSTMAN

Dear Comrades,

The SSPOs, Koraput Division vide Memo No.B2/DPC-Postman/11 dated at Jeypore (K) the 15.06.2011 has declared the DPC result for Postman category.

The following GDS Officials have been recommended and selected for the post of Postman in Koraput Postal Division by the Departmental Promotion Committee held on 09.06.2011 against the vacancies under seniority quota for the year 2009 & 2010 subject to satisfactory verification of educational, caste certificates and relevant documents/office records in connection with the service of GDS.

Sl No Name & Designation of the candidate (GDS) Community Remark

01 Banchhanidhi Nayak, GDSPKR, Mirganiguda SO OBC Selected under OBC Category

02 Sri Lingaraj Deo, GDSMD, Sanahuma BO, Gudari SO UR Selected under UR Category

03 Sri Mansing Bhatra, GDSMD, Mokiya BO, Papadahandi SO ST Provisionally selected under UR Category subject to submission of required educational documents

04 M Basudev Rao, GDSBPM, G S Khal BO, J K Pur SO UR Selected under UR Category

05 Budhia Patra, GDSMC, Saguru BO, Lamtaput SO UR Provisionally selected under UR Category subject to submission of required educational documents.

06 Sri K Ch Rout, GDSPKR, Paduva SO OBC Selected under UR Category

07 Sri Bhasman Naik, GDSBPM, Naktiguda BO, Papadahandi SO ST Selected under UR Category

The Units to be allotted will be intimated later on. In case, the above candidates decline for the post of postman, the next senior GDS Official whose cases have been examined by the DPC and kept in the approved waiting list will be offered the post.

The SSPOs, Koraput Division vide Memo No.B2/DPC-MTS/11 dated at Jeypore (K) the 14.06.2011 has declared the DPC result for Postman category.

The following GDS Officials have been recommended and selected for the post of MTS in Koraput Postal Division by the Departmental Promotion Committee held on 10.06.2011 against 50% vacancies of the year 2009 & 2010 on the basis of latest recruitment rules, subject to satisfactory verification of educational, caste certificates and relevant documents in connection with the service of GDS.

Sl No Name of the GDS Community Remarks

01 Shri Sridhar Majhi  GDS BPM,Ekori BO Kodinga SO ST Selected under UR category for 2009 vacancy

02 Shri Srikar Sahu  GDSPKR Jolaput SO OBC Selected under OBC Category for 2009 vacancy

03 S K Ali GDS MD, Rayagada HO UR Selected under UR Category for 2010 vacancy

The Unit to be allotted will be intimated later on. In case the above candidates decline for the post of MTS, the next senior GDS Officials whose cases have been examined by the DPC and kept in the approved waiting list will be offered the post.

India Post ties up with Fabindia

Dear Comrades,

In its first partnership with a private firm, India Post on Tuesday said it has partnered with retail chain Fabindia, which will help customers send Fabindia products to their friends across the globe.

"As a part of the joint endeavour, India post will now offer customers hassle free postal retail service, which would enable the customers to buy, pack and dispatch Fabindia products not only within India, but also to international destinations," an official statement said.

To help the customers in booking consignments, Delhi Postal Circle staff will be deployed at this Fabindia store, it added. The counter, located at Fabindia's flagship store at Greater Kailash in New Delhi, was jointly inaugurated by India Post Secretary Radhika Doraiswamy, and Fabindia Managing Director William Bissell.

India Post has a postal retail service at the Jawahar Vyapar Bhawan (Cottage Emporium), where customers can avail speed post services and registered parcel booking.

With 140 stores across 58 cities in India and four international stores, Fabindia Overseas Pvt Ltd is one of India's largest retail chain. The post office counter at the Fabindia outlet will offer the domestic and international flat rate parcel service and EMS speed post service.

Tue, Jun 14, 2011 at 19:50  Source : PTI

India post to take up old age pension issue with state government

Dear Comrades,

A week after the government decided to shift to banks for distributing old-age pensions, India Post is trying hard to get back its largest customer in the state. The officials have sought an appointment with chief minister J Jayalalithaa to persuade her to switch back to the post offices. Losing the state's project could mean a loss of more than Rs 60 crore a month for India Post.

The old-age pension scheme was so far carried out by India Post, delivering monthly pensions at people's houses through money orders and cheques. It covers senior citizens, differently-abled people, destitute wives and widows and destitute agricultural labourers. The state government will switch to the banks by September.

The postal department gets Rs 25 as commission for each money order for more than 28 lakh pensioners, including 10 lakh in city. The government decided to choose banks for the scheme after the CBI apprehended 11 postmen for malpractices in 2010. In order to mollify the state government, India Post has already done some damage control and will be regularizing its services. "We dismissed two other postal officials. We have set up monitoring cells for the scheme. We also have special adalats to settle grievances," said a senior official in the Tamil Nadu circle of the postal department. The department has also furnished details of fake names and addresses in the scheme to the state government. "We have received no complaints in the last two months," he said.

The department will offer savings accounts for pensioners in the postal banks. "This government is already considering savings accounts for pensioners in the banks. We have the expertise to handle this. We deal with more money in the form of small savings accounts than all the commercial banks," the official said

If agreed upon, the pensioners' savings accounts could bring in an additional revenue of Rs 45-50 crore for India Post. As an added incentive, the postal department is also upgrading all its services this year on a par with commercial banks.

India Post also expressed reservations about banks' ability to carry out the scheme. Nearly 70% of the beneficiaries under the scheme live in rural areas and remote places. "Banks do not have the network that we have when it comes to door-to-door delivery in remote areas. So we shall be asking the government to switch back to us."

R Vasundara, TNN Jun 13, 2011, 03.41am ISTCHENNAI Times of India

Successful holding of DWC Meeting Jeypore 12th Jun, 2011

Dear Comrades,

In pursuant to the unanimous decision taken by the NFPE, FNPO and all the unions affiliated to them including AIPEU and AIPEDU CHQ, New Delhi to hold All India Indefinite General Strike w.e.f. July 5th, 2011, today the AIPEU Group-C, AIPEU Postmen & Gr-D and AIPEDEU (GDS), Koraput Divisional Branch unions organized a Joint Divisional Working committee-cum-General Body meeting to discuss and take decision to make the forthcoming strike a grand success.

This strike is being organized to oppose the destructive and anti-welfare policies of the Government of India and its impact on the employees of DoP focussing the twenty five point charter demand. The 25 charter of demands are submitted hereunder.

Comrade Nirmal Chandra Singh, Circle Secretary, AIPEDEU Orissa Circle Branch was the Chief Guest of the meeting. The dignitaries who were on the dias are Com. R N Nahak, President and Com. Purna Chandra Maharana, Divisional Secretary, & Com. P Suresh Kumar, Organising Circle Secretary, Com. J Ch Choudhury, Vice-President, AIPEU Class-III union; Com. L Bisoi, President and Com. Nilamabar Naik, Divisional Secretary & Com. Prabhat Ku mahapatra, Organising Circle Secretary, Postmen & Gr-D Union and Com. J Kar, President and Com. Rajendra Prasad Sahu, Divisional Secretary & Com. Narasingh Sahu, senior comrade, AIPEDEU (GDS) Union.

A detailed discussion on the importance of the strike based on the 25 charter of demands was described to all concerned clarifying the doubts of many comrades and a unanimous strong decision was taken to make the 5th July All India Indefinite General Strike a grand success by closing down all the post offices in undivided Koraput District until our demands are not fulfilled at CHQ level. Hundreds of comrades including Women Comrades and new entrants from every corner of Koraput Division participated in today’s meeting. Few pics of the meeting is placed hereunder.

 

Demands

1. Stop closure /merger of PO/RMS Offices including BOs. Review the orders implementing Speed Post Hubs and Delivery Hubs and restore status quo ante. Stop outsourcing the works of Postal, RMS & MMS functions.

2. Grant status as Central Civil Servant to GDS employees for all purposes including service matters, pay scale, increment, allowances, pension, promotion and other terminal benefits, leave, bonus and trade union facilities. Scrap new recruitment rules for appointment as postmen which curtails promotional avenues – restore previous rules and withdraw tighten norms assessing BPM’s work. Drop reduction of allowances in case of reduction of workload.

3. Revise the wages of casual labourers and contingent employees w.e.f. 01.01.2006 based on the minimum pay recommended by 6th CPC. Stop outsourcing the work of casual labourers and contingent work. Grant temporary status to eligible full time casual labourers, Convert part time into full time absorb full time, part time contingent employees in vacant GDS posts.

4. Immediate revision of OTA & OSA rates.

5. Implement the assurances made on 12.07.2010 Strike Settlement and also the JCM Departmental Council Meeting held on 23.08.2010.( List enclosed) Ensure prompt holding of Departmental Council Meetings.

6. Immediate finalization of Cadre Restructuring proposals including Postal Accounts as assured by the Secretary Department of Posts and its implementation.

7. Stop decentralization of Postal Accounts, PLI and RPLI and ensure status-quo. Save DPLI office, Kolkata and ensure job security to the staff, DPLI.

8. Expedite the process of filling of all vacant posts in all Wings including GDS.

9. Stop implementation of Postmaster Cadre till finalization of Cadre Restructuring. Ensure 100% filling up of LSG, HSG-II, HSG-I before implementation of Postmasters Cadre, remove the retrograde eligibility conditions for appearing the examination of Grade I and PSS Group B and allow account line officials also.

10. Drop the proposed move of ending the services of existing System Administrators by outsourcing the technology work to the outsider agencies. Create the System Administrators Posts as assured and specified norms and other works and make the cadre as a promotional cadre to PA/SA.

11. Stop combination of beats /double duty, stop harassment of staff insisting 100% impracticable condition for delivery under Project Arrow. Settle the demands raised in the Postmen Committee such as distance factor, number of articles, Grant of Cycle allowance without distance condition, cash payment for uniform and kit items, Supply of good quality uniforms, Revision of norms.

12. Fixing norms for new assigned works of MTS. Allow to decline postman promotion for MTS under seniority quota and review the recruitment rules of MTS to Postmen / Mail Guards.

13. Grant promotions to Drivers / Artisans at par with other C.G. organizations like Railways/Defence. Higher Pay Scales to charge hand & Drivers. Revision of CRC EPP and Logistic norms.

14. Declare SBCO Staff as Divisional cadre , Stop harassment of SBCO officials under contributory factors. Complete the Ledger Agreement Work update the SBCO before launching Core Banking.

15. Fill up all Postal Civil Wing and Electrical Wing posts as per CPWD norms. Creation of Postal /Electrical and Architectural Division in every Circle. Expedite the Restructuring of Civil Wing Cadres.

16. Ensure full fledge functioning of newly formed Postal Accounts Offices by providing adequate staff strength and accommodation. Rectify the anomaly caused due to promotion of Group ‘D’ official to the cadre of LDC after 2006. Restore the residency period of three years in respect of JA to SA promotion retrospectively w.e.f. 13.12.2006. Grant MACP to those joined in Sorter cadre treating LDC as entry grade as the Sorter grade has been defunct since 2000.

17. Counting of past services rendered by erstwhile RTPs for promotions and MACP.

18. Implement Apex Court Judgement in case of RRR Candidates in true sprit and extend to all approved RRR Candidates awaiting for absorption.

19. Stop Harassing and victimization of innocent officials under contributory negligence factors. Implement the true spirit of Govt orders and Volumes and no recovery should be made if the concerned is not directly responsible for the loss sustained to the department.

20. Stop discrimination towards PO & RMS Accounts Cadre, Create separate cadre and earmark % of posts for norm based promotions in the same cadre, Count Special Allowance for fixation on promotion, Withdraw the recovery imposed on Postman Pay fixation and drawal of bonus to GDS. Restore the date of passing the Acct examination for according LSG promotions instead date of entry in PA cadre.

21. Enhance the LR strength on all cadres to the extent of 20% and fill up all vacant LR posts.

22. Ensure prompt grant of Child Care Leave as per the liberalized orders, unnecessary hurdles put forth should be dropped.

23. Review the MACP clarifactory orders and rectify the issues like, non drawal of spl allowance on acquiring MACP, wrong interpretation of IIIrd MACP to departmental promotes only after 30 years, Counting as double promotions as Group D & Postmen even in the case of promotion to Postman on GDS quota, non counting of training period for MACP, ignore promotions acquired on deptl exam for MACP, ignore all uncommunicated average bench marks for MACP as Judicial verdict.

24. Stop attack on Union office bearers by misusing Rule 37 transfers and Rule 9 of CCS (CCA) Rules. Dispose all Rule 9 (Pension rules) disciplinary cases pending at Directorate years together.

25. Denying the legitimate right of employees to avail holidays & Sundays by compelling them to attend frequent meetings/ Melas.

National Savings Scheme Fund review to help you save more

Dear Comrades,

Soon, you may be able to save more through the Public Provident Fund (PPF). A review committee under Reserve Bank of India deputy governor Shyamal Gopinath on the National Small Savings Fund (NSSF) has proposed an increase on the maximum you can invest in PPF from the existing Rs 70,000 to Rs 1 lakh, in line with the Section 80C limit for Employee Provident Fund.

Experts say the government could garner more funds if the move is implemented. “This is a very good move, as PPF is completely exempt from tax. Many people invest larger chunks of money in PPF for their retirement and this forms the maximum for saving taxes,” says Kartik Jhaveri of Transcend Consultants.

THINGS TO KNOW

•You can invest more in PPF as the investment limit may be raised to Rs 1 lakh

•Returns from small saving instruments of the same tenure will be market linked

•You stand to earn 25 basis points more than the related market instrument

•Withdrawals from PPF would mean losing two per cent compared to the prevailing rate

•KVP may be replaced by 10-year NSC

•Returns from senior citizens scheme and NSC would be unchanged

Most importantly, if the committee’s recommendations are implemented, returns from these instruments will be market linked to 10-year government securities (G-secs) of similar maturity with a positive spread of 25 basis points. That implies if the 10-year G-sec is trading at 7.98 (as on April 1), investors could expect around 8.25 per cent from PPF. Returns from National Savings Certificates and other instruments will also improve.

The revised rates may be notified by the government afresh at the beginning of every financial year based on the average yields on government securities in the previous calendar year.

While the committee offers a carrot of raising the limit, there is a stick if someone wants to withdraw money prematurely. The committee has recommended a cut of two per cent on withdrawing from the deposits as compared to the prevailing rate.

There are many more changes recommended for small saving schemes. Kisan Vikas Patra (KVP) may be removed from NSSF. “This is in the interest of investors, as this scheme did not give tax benefits. And, though it could double investors’ money, they had to wait for over eight years for the same,” says D Sundarajan of Trendy Investments.

Keeping in mind the need for long-term investment products, the committee has asked for the introduction of National Saving Certificates (NSCs) of 10 years. The existing NSC has a lock-in of six years, which may be brought down to five years. But, this may not mean much for you as there is no revision in returns and the interest earned is taxable.

The committee has recommended a rise of 50 basis points in returns from the postal saving scheme i.e. four per cent as against 3.5 per cent now, in line with the bank savings account. But, there would be two exceptions in the form of Senior Citizens Scheme and National Saving Certificate (NSC), where the rates are unchanged at nine per cent and eight per cent, respectively.

In comparison, the State Bank of India’s (SBI ) one-year term deposit is offering 7.75 per cent. And the amount invested is not exempted from tax. At the same time, the tax-saving five-year bank deposit from SBI is fetching 8.25 per cent. Sundarajan says, “We have been advising clients who fall in the 10 per cent tax bracket to stop investments in even PPF and lock-in longer-term fixed deposits earning 10 per cent and more. However, for those in the 20 and 30 per cent bracket, PPF makes more sense.”

And, from the tax perspective, financial planners favour fixed maturity plans of mutual funds, which are taxed at 10 per cent without indexation and 20 per cent with indexation. Jhaveri adds, “These are very high rates and may not sustain for long. Hence, it would be helpful to revise rates higher for shorter tenure investments, the interest rate cycle for which is visible. Ten years is too far away to be able to predict the rates now.”

Neha Pandey / Mumbai June 9, 2011, 0:45 IST

Postal tech upgrade to create Rs 5,000-cr scope for IT firms

Dear Comrades,

IBM, TCS, HP, Wipro, HCL Tech and others to vie for the Rs 1,000-cr system integrator deal.

The postal department’s technology upgrade initiative is expected to create opportunities worth Rs 5,000 crore for information technology (IT) companies, making it one of the biggest IT outsourcing contracts in the domestic market in recent years.

Given the sheer size and complexities involved in the process, the Department of Posts (DoP) has split the project into eight components and has invited bidders. The department has identified Accenture as its consulting partner for the initiative.

Highly-placed industry sources say the department has already issued Requests For Proposals (RFPs) for six contracts, while the remaining two are expected to be issued this month. Despite repeated attempts, officials at DoP could not be reached.

Of the six RFPs already issued, identification of the core system integrator is said to be the biggest one with a contract value of over Rs 1,000 crore. Most leading IT firms, including domestic companies like Infosys, TCS and HCL and global majors like HP and IBM are understood to be participating in the bidding.

The RFP for identifying partners for ‘financial procedure services’ contract saw participation of Infosys, Wipro and TCS other than HP.

“The process of finalising the lowest common bidder for this contract is underway and is expected anytime from now,” said sources from a bidding company. “Looking at the pace at which the department is expediting the process, we expect all contracts to be finalised before October-November,” they added.

The four other RFPs issued are for identifying outsourcing partners in areas of data centre management, network integrator, rural ICT system integrator and change management.

DoP initiated its IT modernisation process last year under the ‘India Post 2011’ plan. The idea was to improve its customer service, deliver new services and improve operational efficiencies.

“The technology modernisation initiative by India Post is an ambitious programme. This should have been done long ago. If we had an efficient postal system with automated post offices, we would not have required setting up common services centres because there are post offices almost in every village,” said Neel Ratan, executive director (e-governance practice), PwC India.

DoP presently has the largest postal network in the world with 155,669 offices of which 89 per cent are in rural areas. But only 12,604 head post offices and sub-post offices have been computerised so far. By the end of 2012, the department wants to computerise all post offices and that would help it offer services seamlessly.

Bibhu Ranjan Mishra / Bangalore June 9, 2011, 0:48 IST

Business-standard

BSNL supports post office money transfer service

Dear Comrades,

State-owned Indian telecommunications provider BSNL is providing technical support for the mobile money transfer launched by India Post. The service has initially been launched in Punjab and Bihar postal circles and the roll out of the service across India is expected to be completed in eight weeks, Business Line reports. People can make money transfers of up to INR 50,000 via post offices, which will provide the sender with a unique PIN code after the money transfer. The sender then sends the receiver the PIN code via SMS and the receiver will get the money delivered at home after verification of this PIN on his mobile. The receiver can also collect the money at the post office. The service is priced the same as a traditional money order at 5 percent of the remitted amount.

 

Wednesday 8 June 2011  00:39 CET  Telecompaper

Small Savings Reformation Recommendation to be implemented

Dear Comrades,

The Central Government on 8th July, 2010 constituted an Expert Committee under the Chairpersonship of Smt. Shyamala Gopinath, Deputy Governor, Reserve Bank of India for comprehensive review of the National Small Savings Fund. The terms of reference of the Committee include review of the existing parameters for the small saving schemes in operation and recommend mechanisms to make them more flexible and market linked; review of the existing terms of the loans extended from the NSSF to the Centre and States and recommend on the changes required in the arrangement of lending the net collection of small savings to Centre and States; review of the other possible investment opportunities for the net collections from small savings and the repayment proceeds of NSSF loans extended to States and Centre; review of the administrative arrangement including the cost of operation; and review of the incentives offered on the small savings investments by the States.

Consequent to the recommendation of the Thirteenth Finance Commission for comprehensive reforms in overall administration of National Small Savings Fund (NSSF), this committee was constituted by Ministry of Finance vide its Order No. 5- 2/2010-NS-II dated 8th July, 2010 to recommend on the reforms required in National Savings Scheme Fund. The Committee‘s recommendations on the rationalization of instruments of small savings are as under:

Savings Account Deposits

The Reddy Committee (2001) had recommended that as long as the rate of inflation is more than 3.5 per cent, the rate of interest on postal savings deposits may continue to be 3.5 per cent. Incidentally, the rate of interest on postal savings deposits had been aligned with the savings deposit rate of commercial banks since March 2003. The Reserve Bank has since increased the savings bank deposit interest rate from 3.5 per cent to 4.0 per cent, effective May 3, 2011 since the spread between the bank savings deposit and term deposit rates had widened significantly. The Committee is of the view that the postal savings deposit rate may be similarly raised by 50 bps to keep it in alignment with bank savings deposit rate. Further, the Reserve Bank has advised scheduled commercial banks to pay interest on savings bank accounts on a daily product basis with effect from April 1, 2010. The Committee is of the view that the Government may consider applying the same formula for the calculation of the interest on savings deposits of post offices once the post offices are fully computerised. On the issue of relaxation/removal of the ceiling, the Committee considered the following two options: if the ceiling has to be removed, the interest income may not be exempt from income tax under Section 10 of IT Act. Alternatively, if the income tax exemption is to continue, the current ceiling may be retained. Taking into account the above considerations and the need for harmonisation with the DTC code removing most tax exemptions, the Committee favours the first option.NSSF

5 Year Recurring Deposit Scheme

To improve the liquidity of the scheme which is needed more by the smaller savers, the Committee is in favour of a reduction in the lock-in period of the scheme from 3 years to 1 year. The penalty on premature withdrawal could be fixed at 1% lower rate of interest than time deposits of comparable maturity. The rate of interest could be benchmarked with G-sec yields of 5 year maturity as was recommended by the Reddy Committee. The 4 per cent commission payable to agents makes it an agent driven scheme. Financial literacy programmes should promote postal savings instruments and the commission should be progressively reduced to 1 per cent over a period of up to three years (by a minimum of 100 bps each year).

Time deposits (of 1, 2, 3 and 5 year maturity)

The postal time deposits, designed to promote thrift, may not enjoy similar liquidity as bank deposits. However, the liquidity of postal time deposits could be improved keeping in view the interest of the small savers. Accordingly, if withdrawn within 6-12 months, the Committee recommends that savings bank deposit rate may be paid (as against nil at present). If deposits are withdrawn prematurely after 1 year, a 1 per cent lower rate of interest than time deposits of comparable maturity may be offered.

Monthly Income Scheme (MIS)

Keeping in view the higher interest rate (inclusive of 5% maturity bonus) on MIS vis-à-vis market rates, the Committee recommends that the bonus should be abolished and the effective rate of interest be aligned with the market rate. Further, the Committee favours retaining the present ceiling on MIS as it would adequately serve the interests of the small savers. The Committee also favours a reduction in the maturity of MIS to five years with the rate of interest benchmarked to 5 year G-secs.

Senior Citizens’ Savings Scheme (SCSS)

The Committee is of the view that SCSS is serving a useful goal as an instrument of social security. At the same time, the bank dominated intermediation of savings under SCSS appears to reflect the rural-urban distribution of the savers under this scheme. As a higher mark-up of 100 basis points over 5-year G-sec security (as against 25-50 basis points proposed for other schemes) is recommended, the Committee is currently not in favour of an upward revision in the investment ceiling, presently fixed at `15 lakh and deemed adequate, keeping in view the fiscal implications.

Public Provident Fund (PPF)

The Committee considered the suggestion of the Department of Posts and some of he State Governments of an increase in the annual investment limit on PPF to `1lakh from the current ceiling of `70,000 to coincide with the ceiling on Section 80C of the I.T. Act. The Committee noted that in the past, the investment limit on PPF used to be usually revised in tandem with that of the exemption ceiling for Section 80C. In the last instance, however, notwithstanding the upward revision of Section 80C from `70,000 to `1 lakh, the investment limit under PPF was not raised. Keeping in view the tenor of PPF and the need to reduce the ALM mismatch of NSSF, the Committee recommends an upward revision in the investment limit to `1 lakh. The Committee is, however, aware that the current provisions permitting premature withdrawal/taking advance against deposits is not in sync with the objectives of the scheme. More importantly, it is not considered practicable to monitor the end use of the funds withdrawn prematurely. Keeping in view the above considerations, the Committee, therefore, recommends that the rate of interest on advances against deposits may be fixed at 2 percentage points higher than the prevailing interest rate on PPF (as against 1 per cent at present).

Savings Certificates

The Committee noted the observations made on savings certificates, viz., KVP and NSC by the Rakesh Mohan Committee that both these instruments are quite expensive in terms of the effective cost to the Government and should be discontinued. The Committee is, however, of the view that while KVP may be discontinued as it is prone to misuse being a bearer-like instrument, NSC could continue with the following modifications: (i) Two NSC instruments would be available with maturities of 5 years and 10 years; (ii) The interest rates would be benchmarked to 5 year and 10 year government securities; and (iii) income tax exemption under section 80C on accrued interest would not be available. Since income tax exemption under section 80C on deposits under NSC would be available, NSC may not be encashed before maturity. NSC would, however, continue to be eligible as collateral for availing loans from banks, as hithert

Aministered Interest Rates for July 1, 2011 to March 31, 2012

Proposed Rate (%)

Savings Deposit 3.50 4.0

1 year Time Deposit 6.25 6.8

2 year Time Deposit 6.50 7.2

3 year Time Deposit 7.25 7.5

5 year Time Deposit 7.50 8.0

5 year Recurring Deposit 7.50 8.0

5-year SCSS 9.00 8.7

5 year MIS 8.00 ( 6 year MIS) 8.0

5 year NSC 8.00 (6 year NSC) 8.0

10 year NSC New instrument 8.4

PPF 8.00 8.2

Review and Recommendation on Commission paid to Agents

The Committee therefore recommends that under PPF, the commission should be abolished. Under PPF, 90% of the transactions are happening through banks and for banks commission is not payable for any other scheme of theirs. The Committee feels that 4% commission under MPKBY is very high and is affecting the viability of NSSF. The Committee recognises that the RD scheme requires considerable effort on part of agents in mobilising monthly deposits. However, 4% commission is distortionary and expensive. The committee recommends that this should be brought down to 1% in a phased manner in a period of three years with a 1% reduction every year. Under SAS, while the commission for senior citizen saving scehme is 0.5%, it is 1% on other scheme. The Committee recommends that while commission should be abolished on Senior Citizen Saving Scheme, on other schemes, it should be brought down to 0.5%.

Although most of the State Governments have already abolished the commission being paid by them, some states are still paying commission to agents in their state. This creates distortion in operation of the scheme and needs to be discouraged, as recommended by 13th FC. In order to ensure that the State Governments do not give any extra incentive to the Agents, the Committee recommends that the incentive paid to the State Government may be reduced from the incentive payable by the Central Government to the Agents.

Table 19: Payment of Remuneration to DOP and the Rates

Year Amount (cr) Rates per Account / certificate (`) SB IVP SC
2004-05 1,861 106.97 8.02 30.19
2005-06 2,318 111.12 8.33 31.36
2006-07 2,490 114.46 8.58 32.3
2007-08 2,476 117.89 8.84 33.27
2008-09 2,802 123.33 9.24 34.8
2009-10 3,133 129.49 9.7 36.54
2010-11 (RE) 3,215 135.96 10.19 38.37
2011-12 (BE) 3,518 142.76 10.69 40.29
 
Please visit the following link for complete analysis and report.
http://www.finmin.nic.in/reports/Report_Committee_Comprehensive_Review_NSSF.pdf