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Encyclopedia of Social Work in India Volume II

Encyclopedia of Social Work in India Volume II


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Published by S.Rengasamy
Encyclopedia of Social Work in India consists of four volumes. This is the second volume
Encyclopedia of Social Work in India consists of four volumes. This is the second volume

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Published by: S.Rengasamy on Aug 12, 2013
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K. Ganesan
Joint National Savings Commissioner, Ministry
of Finance, Nagpur.

Welfare measures like old age pension, health
services and family benefits are not available in
India adequately to the vast majority of citizens.
Individual savings thus acquire greater
significance and purpose. Furthermore,
traditional methods of savings and investment
like hoarding in gold and other fixed assets do
not contribute to the economy of the country.
Hence education in productive savings is
essential for all citizens.

Poverty is not always an economic problem
alone. Very often it is a social or a human
problem too. An agriculturist or an industrial
worker may have a good income, but he may
spend his entire earnings on socio-religious
occasions, fairs, festivals, etc. Here again, the
National Savings Organisation has a role to play
in educating the people in thrift and savings.
The savings movement endeavours to bring a
change in the thinking of the people. It enables
individuals to assess future specific needs and
build up a financial provision for the purpose.


Though engaged in the mobilisation of
savings, the efforts of the National Savings
Organisation (NSO) differ from those of other
financial institutions in public and private
sectors working with a similar objective but
purely on commercial lines and with only
financial perspectives. The NSO has among its
main objectives promotion of thrift and raising
household savings from the largest number of
people. The volunteers of the organisation work
not only among people who have the capacity
to save and invest in savings schemes but also
among the poor people for whom special new
projects, schemes and benefits have led to the
generation of more savings. The NSO
undertakes special campaigns for mobilisation
of savings to provide resources for development
plans and to combat inflationaly pressures.



The main objectives of the National Savings
Organisation are promotion of the idea of thrift
as a way of life among people, and mobilisation
of household savings for investment through
small savings schemes and thereby harnessing
resources for national development. The
aspiration of the organisation is to make the
people, rich as well as poor, save through small
savings schemes and thus participate in the
country's development programme; the aim is
to make the movement a people's movement in
the real sense.

During periods of rising prices, small savings
schemes serve as instruments for mopping up
the extra purchasing power. In addition to
waging a war against waste, unwise spending,
hoarding and other activities, the organisation
takes upon itself the duty of propagating thrift,
savings and family budgeting, and postponing
expenditure which can be deferred in favour of
better utilisation in future.

Small savings schemes offer many facilities to
all sections of the community to save according
to one's own ability. Schemes are designed to
suit various needs and occasions. There are
some schemes in which even the humblest of
the citizens in the country can save and
participate. There are others in which the rich
and affluent class can profitably invest and earn
a decent interest. Some schemes also offer
attractive tax concessions to tax payers.

Organisational Set-Up

The National Savings Organisation functions
under the Ministry of Finance, Department of
Economic Affairs, and is headed by the National
Savings Commissioner for India, with
headquarters at Nagpur. One joint national
savings commissioner shares his responsibilities
and of the four deputy national savings
commissioners in the same office, three look
after regional offices and one is assigned
exclusively for training of staff and extension
agencies and volunteers. The field organisation
is spread all over the country to propagate the
message of thrift and savings. It consists of 29
regions, one each under a regional director or

deputy regional director. The offices are located
in State capitals, except in the case of States like
Maharashtra, Uttar Pradesh, West Bengal,
Andhra Pradesh and Madhya Pradesh where
there is more than one office of a regional
director. In each region, the regional director is
assisted in the field by assistant regional
directors, whose offices are situated at divisioal
headquarters, controlling one or more districts.
The grassroots officer is the district savings
officer who is in charge of the district or a part
of it and discharges multifarious functions.

To assist and advise the official organisation
at the apex level, a Central Advisory Board has
been set up, with the Union Deputy Minister for
Finance as chairman and the National Savings
Commissioner as secretary. Other members
include Chief Ministers /Finance Ministers of
States, Members of Parliament and State
legislators, economists, social workers, and
trade union leaders. At the State level a similar
body exists to advise a State government. In
some States, at the grassroot level like
panchayats, a small non-official committee
assists the local officers in small savings work.


Mobilisation of savings is a highly competitive
job in which private moneylenders, firms,
companies, industries, banks, financial
institutions and many others engage themselves
in aggressive canvassing and publicity for
collecting funds. Small savings, as a government
organisation, has its limitations in such publicity,
both in terms of money and media and
methods. Despite various constraints, like lack
of adequate funds, technical manpower, etc,
small savings is utilising different media, both
modern and traditional. The organisation has
120 publicity vans for this purpose. Folk music,
puppet shows, jatras, quawalis, rural sports like
cart races, etc. have been introduced in rural
areas for publicity.

Role of the State Governments

Apart from the National Savings Organisation,
the State governments are involved in the small
savings programme and are taking keen interest
in stepping up the collections in view of the fact
that two-thirds of the net collections made in a


State are made available to that State as loan on
easy terms, repayable over 20 years. Some
State governments have set up their own
organisations with a director and field staff. This
has given a further fillip to small savings

Role of Post Offices

The Post Office Savings Bank is the forerunner
in the savings movement with a history of over
100 years. All the small savings schemes are
operated and serviced by the post office
through a network of 1.3 lakh post offices
(1981) spread all over India and engaged in
mopping up savings and educating the rural folk
in the art of banking in the remote areas.

Role of State Bank and Other Institutions

Of late, the State Bank of India and other
nationalised banks have also been entrusted
with the task of receiving money for small
savings securities like National Development
Bonds, Public Provident Fund and bank series of
certificates. These are expected to make an
important contribution to the small savings

Extension Workers and Agencies

The ultimate objective of the Organisation is
to make savings a voluntary movement. While
the government lays down the policies,
volunteers and various extension agencies
propagate and collect the savings of the people.
There are more than two lakh extension
workers, agents, group leaders, sanchayika
leaders, national service scheme volunteers and
extra-departmental branch postmasters. Five
extension agencies are directly involved in
collections of small savings.

Authorised Agents: Authorised agents
canvass and collect directly from investors and
deposit the collections in the post office or the
State Bank. Over 56 per cent of them were
really active and collected from the public Rs
429 crores during 1980-81. During the five years
beginning 1976-77, the collections more than
doubled, and a very bright future in collection
was seen under this category. These agents get
1.5 to 2.5 per cent commission on the deposits
obtained by them from the public. Agents are

selected and trained in canvassing and
salesmanship. Though the agency system has
begun operating in the rural areas also, it has
more impact in the urban areas. In addition to
the problem of finding a suitable agent in the
rural areas, prospecting an investor for the
small savings scheme is an equally difficult task.
However, in recent years, more agents have
started operating in the rural areas also.

There are a number of social service
institutions, voluntary organisations, women's
organisations and social workers, which have
taken up the agency and are working in a spirit
of social service and earning some
remuneration also.

Pay Roll Scheme

The National Savings Organisation has
introduced with success a scheme of Pay Roll
deduction for savings. The scheme operates
through the simple mechanism of ensuring that
a certain sum is deducted every month from the
pay of the employees on the strength of a
written authorisation to this effect and the
amount so deducted is credited to his account
in the post office. To secure the consent of the
employees, group leaders and volunteers are
created in each establishment to help the
officials of the organisation. Employers are also
persuaded to provide support. The most
popular scheme is the 5-year Post Office
Recurring Depost scheme in which after five
years, the deposit is repaid with interest. This
scheme also enjoys special benefit protected
savings. Should the depositor die during the
currency of the account, the nominee or the
legal heir of the depositor is entitled to receive
the full maturity value upto Rs 20 denomination
Recurring Deposit Account provided the age of
the depositer at the time of opening the
account was between 18 and 53 years and the
account was current with at least 24 monthly

The pay roll scheme made very good progress
with about 85,000 establishments operating the
scheme for the benefit of 84.93 lakh employees
by the end of March 1981. The collections
during the year were Rs 185.83 crores. A good
percentage of the total wage earning


population in the organised sector of the
country has been brought into the scheme. The
aim is to enrol under the scheme all the salaried
and wage earning population in the organised

Mahila Pradhan Kshetriya Bachat Yojana

This scheme seeks to create awareness
among housewives for thrift and savings.
Women with an aptitude for social work are
selected for approaching housewives in a
particular ward, area or village in the
neighbourhood. They propagate not only
schemes of savings but also ideas of consumer
protection, family budgeting, child care, food
and nutrition, home economics and similar
home science subjects. While doing this work as
a social service they also earn money by way of
commission for canvassing for small savings
schemes. For unemployed graduate girls, the
scheme affords employment and earnings in
urban areas.

The agency is also open to women's
organisations, social service institutions, trade
unions, service associations and professional
associations which can propagate the savings
scheme among its members and also among the
public and earn a commission which will be a
source of income for welfare activities.

In 1980-81 there were 32,272 mahila
pradhan agents bringing in a collection of Rs
40.34 crores. The scheme is popular in Uttar
Pradesh, Tamil Nadu, Kerala, Maharashtra and


Sanchayika is the name for the School Savings
Bank. The scheme aims at educating children in
regard to thrift and money management and
train them in the art of banking. In the
children's bank, all the operations—manning
the counter, receiving money, pass book entry,
ledger posting and interest calculation are done
by senior student trustees and volunteers under
the supervision of the teachers.

There were in March 1981, 37,105 san-
chayikas in India with a membership of 1.22
crores and a collection of Rs 4.33 crores.

Extra-Departmental Branch Post Masters:

Carrying the message of savings and promoting
savings among rural folk has been a problem.
The National Savings Organisation has
depended on the extra-departmental branch
postmaster as an effective link to propagate the
scheme. He occupies an important place in rural
society and is perhaps next only to the village
headman or village teacher in wielding influence
over the villagers. There are more than one lakh
such postmasters who are activised for small
savings work by special training and incentives
in the shape of commission on investment
secured. In March 1981, 29,632 of them took
interest in this work.

Nothing is Small

There are on the whole five types of accounts
and six types of certificates catering to the
needs of individual savers in small savings. The
schemes have been devised that they afford
benefits and appeal to different classes of
people by virtue of certain special features and
characteristics. Without going into the details of
rates of interest to denominations and other
terms and conditions attached to each and
every investment scrip under small savings, the
following information will indicate the purpose
and principle involved.

One broad classification of the scrip is
'taxable' and 'tax free' investments. Such a
classification of scrips for investors as well as
savers may not be available in any banking
industry. This special classification has a
historical background. Small savings schemes
launched directly as government schemes have
to treat all citizens in a fair, equal and equitable
manner in the case of taxation. Realising that
payment of a disproportionately high rate of
interest to attract savings and investments from
affluent persons and income tax payers will
mean a premium and will also starve the capital
market of funds for commercial and industrial
purpose, only some tax benefits are given, limits
for investments are fixed and a reasonable rate
of interest is allowed, keeping in view that the
rate of interest paid and tax concession given
largely balance each other, and there is no
undue benefit. Thus, for the tax payers, certain


certificates like 7-Year National Savings
Certificates II and Post Office Savings Bank
account may give a little lower rate of interest
(6'/2 per cent plus bonus for certificates and
5V2 percent for savings bank) but being tax free
interest, it will still be attractive and profitable
to this class of people. To encourage the tax
payers to save in long term securities,
particularly for family welfare and retirement
benefits, some more concessions in tax
structure are also given. These concessions are
made available not only to small savings
schemes but also to such other schemes like
insurance, provident fund and unit-linked
insurance. They permit deductions in taxable
income in a year and are based on a formula
which takes into consideration, total income,
amount of deposit, insurance, provident fund,
comulative time deposit etc. This concession
helps to divert a portion of the tax payer's
income into long term investments like public
provident fund, 10 year cumulative time
deposit, small savings account, provident fund
account, insurance, unit-linked insurance, etc. In
public provident fund account there is a special
provision to the effect that the account cannot
be attached even by a court of law for the
liabilities of the holder. This special provision
protects the genuine purpose of opening an
account for family needs, old age and
retirement benefits. Furthermore, for the
general public who are not paying income tax
and other related taxes, deposits and securities
have been thrown open with attractive interest
rates in some cases and having an edge over the
commercial bank.

There are a few other salient features of small
savings that are unique in the savings field:
(i) Protected Savings: The Protected Savings
Scheme provides benefit of an insurance cover,
if the saver in a 5-year recurring deposit account
dies after two years of operating the account.
Though the maximum amount payable to the
nominee of the account was Rs 1,556.20 (as per
terms operative in October 1981), it is a welfare
scheme providing some relief to the saver's
family in distress.

(ii) Post Office Savings Bank Prize Incentive
To give a fillip and attract new

deposits, a prize incentive scheme was
introduced in 1973, offering a first prize of Rs
one lakh, and 11,116 other prizes in lucky draws
conducted twice in a year. To be eligible to
participate in the draw, the post office savings
bank account should have a minimum seposit of
Rs 200 continuously for six months.

(iii) Public Provident Fund: Subscribing to a
provident fund has hitherto been a privilege of
employees in government and in organised
industry and trade with certain tax benefits and
terminal benefits. Self-employed and other
citizens did not have the benefits of provident
fund for old age and security. The public
provident fund scheme, promoted by small
savings, now enables all citizens to save subject
to certain minimum and maximum limit of
contributions. During 1980-81, the number of
accounts and amount deposited was 45,099 and
Rs.27.69 crores respectively.


The total amount standing to the credit of
small savings was more than Rs. 8,587 crores as
of September 1981. The net collections during
the preceding 5 years are as follows: (Table


It is indeed difficult to assess the benefits and
progress of the schemes under such
programmes. Owing to these efforts one may
ask, "how many have started saving?" "How
many have been saving regularly and
continuously", "Ultimately, how many new
savers has the movement been able to enrol?"
The index of progress upto March 1981 is given
below (Table Omitted)
The four small savings schemes mentioned
above have covered 9.5 per cent of the
population or about 38 per cent of the
households. More than a crore of people have
invested in savings


Rising prices and inflationary trends not only
inhibit the savers and make a claim on that part
of their money that would have gone into
savings; they also create the problem of erosion


of the intrinsic value of money and fall in its
purchasing power, particularly in the case of
long term securities.

When an investor poses the question, "What
will be the value of my savings of Rs. 10,000 in
Public Provident Fund after 15 years? Can I own
a house of the value of Rs.60,000 today, if I save
Rs.500 every month in Cumulative Time Deposit
for 10 years, even after adding the interest?
These questions are very difficult to answer and
in no country has any savings scheme given the
proper answer, except perhaps when the
savings is "tied down to the index".

The scheme of small savings has not
developed as an independent institution. It has
to depend on other departments and
organisations for its functioning. Though the
Ministry of Finance, Department of Economic
Affairs, is the custodian of the scheme, post
offices, the State Bank and other nationalised
banks are the 'selling counters' on which it has
little control. State governments have also
deployed officials and set up organisations for
stepping up collections. Publicity for small
savings is mostly done by the Directorate of
Advertising & Visual Publicity. Thus, the
problem of proper coordination of functions
and activities has to be faced.

Communication with agents, group leaders,
sanchayika volunteers, counter clerks, extra
departmental branch postmasters— over six
lakhs of people—engaged in small savings is a
strenuous job, and training them in the area of
canvassing and serving small savers is a massive

Despite constraints, the small savings
movement has come a long way since the idea
was first mooted and is making a significant
contribution in spreading the habit of savings
among people of modest means and in
mobilising resources for the country's
development programmes. Its contribution in
the years to come is expected to be still greater.

K. Ganesan

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