A reduction in the maturity period of monthly income schemes and NSC, an upward revision of the ceiling on annual subscription in the PPF from R70,000 to R1lakh and a revision in the rate of interest in post office savings from 3.5% to 4% are among the major recommendations of the committee for the comprehensive review National Small Savings Fund (NSSF).

The committee headed by Shyamala Gopinath, deputy governor Reserve Bank of India, has also recommended the discontinuation of Kisan Vikas Patra (KVP) and the continuation of other schemes with suitable modifications.

It has suggested that the maturity period of monthly income schemes and NSC be reduced from six to five years. Recognising the need for a long term investment opportunity after discontinuation of KVP, the committee has also recommended introduction of 10 years NSC scheme.

The committee has suggested benchmarking of interest rates on other small savings schemes to rates of G-Sec of similar maturity with positive spread of 25 basis points with two exceptions. The first exception is 100 basis points spread for senior citizens? schemes, keeping in view its social objective. Second exception is 50 basis points spread for newly recommended 10 years NSC keeping in mind higher illiquidity.

The committee has recommended that these 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.

The committee has recommended that the mandatory component of investment of net small savings collections in state government Securities be reduced from 80% to 50 %. The balance amount could either be invested in central government securities or could be on-lent to other states on basis of requirement or could be lent for financing infrastructure projects requiring long term finance.

The committee recommended that the tenure of these loans may be reduced from the current 25 years, including moratorium of 5 years to 10 years. The committee has recommended that these loans may be extended at 70 basis points higher than the average interest payment on small savings to the subscribers on the total outstanding stock in previous financial years.

The committee has recommended for abolition of payment of commission to agents on PPF and senior citizens? savings scheme and reduction of commission paid on Standardised agency system to 0.5% from current level of 1%.

The committee has also recommended reduction in commission payable under Mahila Pradhan Kshetriya Bachat Yojana on recurring deposits from current level of 4% to 1% in a phased manner over a period of three years. The committee has recommended that the total cost of operation of NSSF should be contained within 0.7 % of the outstanding small savings.

The committee which submitted its report to the finance minister Pranab Mukherjee on Tuesday included State Bank of India MD R Sridharan, additional secretary Ministry of Finance (Budget) Shaktikanta Das, Rajiv Kumar, formerly director & chief executive, Indian Council for Research on International Economic Relations and currently secretary general, Ficci and Anil Bisen, economic advisor, ministry of finance.