Earlier, small savings in the state were hit by the mushrooming of ponzi schemes. The state-level bankers committee (SLBC) reported that post office deposits fell to a meagre R157 crore in FY12 from R12,000 crore in FY11. Deposits in small savings improved after the government initiated action against the ponzi menace. But there are fears they will fall again after the state floats its own scheme.
The proposed Safe Savings Scheme (to be managed by West Bengal Infrastructure Finance Development Corporation (WBIDFC) along with four banks SBI, UBI, Allahabad Bank and UCO Bank), plans to offer higher rates than the National Savings Certificates (NSCs) issued by post offices.
This can divert the chunk of post office investors towards the state-managed scheme.
NSC rates at present vary between 8.4% and 8.8%, depending on the term of deposit. They were brought down from last years 8.5-8.9%.
WBIDFC chairman Abhirup Sarkar said by no means the proposed scheme would compete with bank rates. But we are going to offer more than what the post offices offer in NSCs, Sarkar said. He agreed that the goverment scheme could take away a good deal of business from the post offices.
While the four banks would accept deposits, the success of the scheme would rest on collection agents, who would go to individuals to convince them and collect deposits. The state plans to engage 24,000-odd postal agents to the scheme, who would also be offered higher commission then the average 0.5% postal commission.
The Union government, based on the Shyamala Gopinath Committees recommendations, slashed post office agents commission in 2011 to save R2,400 crore on deposits. Banerjees move is also aimed at compensating the post office agents in the state.
The SLBC is, however, doubtful about the success of the scheme mainly on two counts. First, the cost of deposits and, second, the returns the government is expecting from deploying the fund. The cost of deposits would be high since banks are expected to provide a fee-based service to the scheme. Similarly, agents would get higher commissions and interest rates would also be higher than that in NSC.
Sarkar said the banks involvement with the scheme would be limited to accepting deposits. But SLBC says there is no clarity on the issue as yet. No modality regarding the scheme has been finalised as yet. It is expected to be decided during the next weeks meeting with the government, UBI general manager Manas Dhar, responsible for overseeing the scheme on UBIs behalf, said.
A state finance department official said banking penetration is low in West Bengal and the scheme would also cover the unbanked. Every depositor would have to open an account in the bank though the certificate under the scheme, which would be given by WBDIFC.
Once the depositors come to know that banks are offering higher rates, they would start parking their funds with them. Besides, depositors in the scheme would not be able to withdraw their money as and when they want unlike in the case of banks. The WBIDFC would float the scheme in October with a R780-crore cash reserve.