Small savings mop-up rises 48%

Small savings mop-up rises 48%

BS Reporter / Mumbai March 24, 2010, 0:52 IST

The risk aversion of individuals and the implementation of the Sixth Pay Commission’s recommendations are showing on small savings collections.

According to latest official data, small savings collections increased 48 per cent to Rs 1,49,178 crore during April-December 2009, from Rs 1,00,903 crore in the corresponding period of the previous year.

As a result of the steep rise, the total outstanding, after factoring in repayments, increased 4 per cent during the period, data in the latest RBI bulletin revealed.

Small savings instruments include Public Provident Fund (PPF), post office savings schemes, Kisan Vikas Patra and National Savings Certificate.

 

“We have not done an analysis, but a lot of it is due to government servants parking money in small savings instruments. After all, they are seen to be safer than any other product on offer for retail investors,” said a government official.

Financial planner Suresh Sadagopan says a number of non-government employees decided to shift their money to safer instruments the moment the stock market started rising from March 2009.

“If you look at the equity market, the retail participation is still very low. A lot of people are putting their new money in safe instruments. This was apparent in recent IPOs. Retail investors have preferred to stay away,” he added.

Mukesh Dedhia, another financial planner, says people are putting money in small savings schemes as they are offering better returns over fixed deposits after rates started falling at the beginning of 2009.

“PPF was the obvious choice as there is 8 per cent tax-free return. A lot of investors have stopped their equity-linked saving scheme investments due to fear,” said Dedhia.

Post office savings schemes offer between 6.25 per cent (one-year) and 8 per cent (Post Office Monthly Income Scheme) returns at present. National Savings Certificate offers 8.16 per cent, according to information on Tamil Nadu Small Savings Directorate’s website. In Kisan Vikas Patras, investments can double in eight years and seven months, it adds.
 

TIDY SUM
RECEIPTS	PPF			Deposits			Certificates			TOTAL
	2008	2009	% Chg	2008	2009	% Chg	2008	2009	% Chg	2008	2009	% Chg
Apr	269	345	28.25	7,912	10,108	27.76	981	2,120	116.11	9,162	12,573	37.23
May	222	254	14.41	9,826	12,317	25.35	1,280	2,747	114.61	11,328	15,318	35.22
June	156	256	64.1	9,519	13,140	38.04	1,452	2,456	69.15	11,127	15,852	42.46
July	153	203	32.68	10,441	14,747	41.24	1,708	2,294	34.31	12,302	17,244	40.17
Aug	73	175	139.73	9,402	14,283	51.91	1,635	2,096	28.2	11,109	16,554	49.01
Sept	171	159	-7.02	9,305	14,672	57.68	1,567	1,865	19.02	11,043	16,696	51.19
Oct	350	167	-52.29	9,566	15,431	61.31	1,589	2,077	30.71	11,505	17,675	53.63
Nov	131	315	140.46	9,450	14,536	53.82	1,795	2,305	28.41	11,366	17,156	50.94
Dec	179	321	79.33	9,834	16,899	71.84	1,948	2,890	48.36	11,961	20,110	68.13
Total	1,704	2,195	28.81	85,255	126,133	47.95	13,955	20,850	49.41	100,903	149,178	47.84
OUTSTANDING