NEW DELHI: The maturity for Monthly Income Scheme (MIS) and National Savings Certificate (NSC) would be reduced to five years from six years and a new NSC instrument with a maturity of 10 years would be introduced. The expert panel, headed by former RBI deputy governor Shyamala Gopinath, in a report had said the continued popularity of both Kisan Vikas Patra (KVP) and NSC among the urban population who are not all small savers could be prompted by an incentive to avoid tax. "As compared to NSC, KVP is more popular as it is a bearer-like certificate due to its ease of transfer. It also has an in-built liquidity due to the regulated premature closure facility offered in the scheme. In view of the recent developments on Anti Money Laundering/CFT front, the committee recommends that KVP should be discontinued," the report had said. TOI had reported on October 10, the finance ministry's move to push for higher interest rates for small savings schemes. The finance ministry said the decisions would be effective from the day notifications are issued. A senior finance ministry official said separate notifications would be issued shortly for various schemes. The reform in the small savings had been held up due to opposition from agents selling these schemes. They were opposing the reduction in commission. Economists said the implementation of the planned reforms would help the government gather resources in a tough year. Earlier, finance ministry officials had said the increase in the ceiling on PPF would help garner about Rs 5,000 crore in the coming quarter and reduce prospects for any further increase in government borrowings. The government has also accepted the recommendation to raise the interest on loans obtained from PPF to 2% per annum from 1%. The interest rate on the post office savings account would be increased to 4% from current 3.5%. Liquidity of post office time deposit of one, two, three and five years would be improved by allowing premature withdrawal at a rate of interest of 1% less than the time deposits of comparable maturity. The finance ministry said payment of commission on PPF schemes and senior citizens savings scheme would be discontinued while agency commission under all other existing scheme except the Mahila Pradhan Kshetriya Bachat Yojana (MPKBY) would be reduced to 0.5% from 1%. The commission of 4% will continue for agents of MPKBY scheme. The panel had recommended that the commission on this scheme be cut to 1% from 4%. Nearly five lakh agents opposed the move and the finance ministry has been forced to continue the 4% commission on this scheme. The move to push ahead with reforms in the sector comes against the backdrop of a decline in small savings. Latest available data shows investors are opting for bank deposits due to the rise in deposit rates. Between April and August, 2011, retail investors have withdrawn nearly Rs 5,500 crore from small savings deposit schemes in post offices and certificates such as NSC. Small savings schemes, most of which enjoy tax exemption, had attracted investment of over Rs 25,000 crore in the same period last year. The finance ministry memorandum said a monitoring group with representatives from the RBI, finance ministry, department of posts, State Bank of India and other banks and state governments would be set up to resolve various operational issues such as reducing the time lag between collection and investment. source: Times of India |
| For Latest Updates Always Visit http://satish24k.blogspot.com/ |
Print
PDF
For Further Reading,
About the Author
0 comments:
Post a Comment