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West Bengal chief minister Mamata Banerjee's brain child--the Safe Savings Scheme is in a limbo, as banks have backed out of the plan.
Launched after the Saradha scam as an alternative to dubious fund raising companies, by the West Bengal government, the scheme is now at the mercy United Bank of India-its sole distributor.
The big setback for the plan comes with State Bank of India refusing to distribute the scheme at a low fee.
While WBIDFC is willing to pay no more than Rs 25 per transaction to the banks, SBI has sought Rs 65 per transaction from the bank.
"SBI had agreed to act as distributor at Rs 25 per transaction for three months, after which they wanted to hike the amount to Rs 65. If SBI backs out of the scheme midway, it would give a wrong signal to the investors, so WBIDFC did not agree to the temporary arrangement," said a source.
The implementing agency is now contemplating if would be viable to continue to the scheme without the support of banks for a long term.
West Bengal Infrastructure Development Finance Corporation (WBIDFC), the agency in-charge of rolling out Safe Saving Scheme, had initially planed to rope in four banks-State Bank of India, UCO Bank, Allahabad Bank and United Bank of India-as distributors of the scheme.
UCO Bank did not join the scheme citing reasons of conflict of interest.
Earlier, the scheme attracted controversy when Allahabad bank sought clarification from the RBI on whether it can collect public deposits on behalf of the scheme. Subsequently, the bank did not agree to become a distributor of the scheme.
Thus, after collecting initial deposits of Rs 3 crore, fresh collection under the scheme have dried. So far, WBIDFC has paid about Rs 75000 to UBI for close to 3000 transactions under the scheme.
WBIDFC, which has been banking on about 30000 post office agents and public sector banks for distribution of the scheme, is paying higher commission of 0.1 per cent, against 0.5 per cent for post office schemes, to attract rural depositors.
The scheme is similar to a bank deposit scheme, and offers interest rates between 9-9.25 per cent over one to five year time frame. Individual depositors can deposit up to Rs one lakh and a family can together invest up to Rs 5 lakh in the scheme.
Notably, one noteworthy feature of West Bengal's economy is the state's predominant position in small savings mobilization (raised through post offices) till 2011-11, the highest among all states in India.
