UNIVERSITY OF MUMBAI

A STUDY ON POST OFFICE SAVING SCHEMES AS AN

INVESTMENT OPTION

A Project Submitted to University of Mumbai for partial completion of the

degree of

Master in Commerce under the Faculty of Commerce

By

PRASHANT GUNASHEKAR

35

Under the Guidance of

DR. PRIYANKA MOHAN

SIES (NERUL) COLLEGE OF ARTS, SCIENCE AND COMMERCE

PLOT NO. 1-C, SECTOR-5, NERUL, NAVI MUMBAI

2020-2021
 UNIVERSITY OF MUMBAI

A STUDY ON POST OFFICE SAVING SCHEMES AS AN

INVESTMENT OPTION

A Project Submitted to University of Mumbai for partial completion of the

degree of

Master in Commerce under the Faculty of Commerce

By

PRASHANT GUNASHEKAR

35

Under the Guidance of

DR. PRIYANKA MOHAN

SIES (NERUL) COLLEGE OF ARTS, SCIENCE AND COMMERCE

PLOT NO. 1-C, SECTOR-5, NERUL, NAVI MUMBAI

2020-2021
 CERTIFICATE

This is to certify that Mr. PRASHANT GUNASHEKAR has worked and duly completed
his project work for the degree of Masters in Commerce under the faculty of commerce in the
subject of Advance Accounting Semester III and his project is entitled “A STUDY ON
POST OFFICE SAVING SCHEMES AS AN INVESTMENT OPTION” under my
supervision.

I further certify that the entire work has been done by the learner under my guidance and that
no part of it has been submitted previously for my degree or diploma of any University.

It is his own work and facts reported by his personal findings and investigations.

Signature of the Guiding Teacher

Seal of the College

Date of Submission: 8th January 2021

Name and Signature of External Examiner

 DECLARATION BY LEARNER

I, the undersigned Mr. PRASHANT GUNASHEKAR here by, declare that the work
embodied “A STUDY ON POST OFFICE SAVING SCHEME AS AN INVESTMENT
OPTION” Forms my own contribution to the research work carried out under the guidance
of Dr. PRIYANKA MOHAN, is a result of my own research work and has not been
previously submitted to any other Degree or Diploma to this or any other University.

Wherever the reference has been made previous works of others, it has been clearly indicated
as such and included in the Bibliography.

I, hereby further declare that all information of this study has been obtained and presented in
accordance with academic rules and ethical conduct.

Name and signature of the learner

Prashant Gunashekar

Certified by:

Dr. Priyanka Mohan

Signature of the guiding teacher.
 ACKNOWLEDGEMENT

To list who have helped me is difficult because they are so numerous and the depth is so
enormous.

I would like to acknowledge the following as being idealistic channels and fresh dimensions
in the completion of this project.

I take this opportunity to thank the UNIVERSITY OF MUMBAI for giving me chance to
do this project.

I would like to thank my Principal DR. MILIND VAIDYA for providing the necessary
facilities required for completion of this project.

I take this opportunity to thank our coordinator DR. NEERA KUMAR for her moral support
and guidance.

I would also like to express my sincere gratitude towards my Project guide DR.
PRIYANKA MOHAN whose guidance and care made the project successful.

I would like to thank my College Library for having provided various reference books and
magazines related to my project topic.

Lastly, I would like to thank each and every person who directly or indirectly helped me
through the completion of my project especially my Parents and Peers who supported me.
 INDEX

Sr. Topic Page no.

no

1 Abstract 1

2 Chapter 1 2-30

1.1 Introduction 2

1.2 History of Postal System 6

1.3 Indian Postal Service 8

1.4 Types of Post Office Deposit Scheme 9

1.5 Benefits of Post Office Saving Scheme 17

1.6 How to Apply for Post Office Saving Scheme 18

1.7 Comparison of Various Post Office Saving Scheme 19

1.8 E-Post 21

1.9 COVID-19 Impact on Interest Rates of Post Office Saving 24

Scheme

1.10 Post Office: Core Banking Solution (Internet Banking,

Mobile Banking, Mobile App) 25

1.11 Norms of Various Postal Service 29

1.12 Statement of Problem 30

1.13 Mission 30

3 Chapter 2- Research methodology 31-32

2.1 Research statement 31

2.2 Objectives and scope of study 31

2.3 Scope of the work 31

2.4 Limitation of the study 31

2.5 Need of the study 32

 2.6 Sample size 32

2.7 Tools and Technique 32

2.8 Data collection 32

4 Chapter 3- Literature Review 33-36

5 Chapter 4- Data Analysis And Interpretation 37-59

6 Chapter 5- Conclusion and Suggestion 60-62

7 Chapter 6- Bibliography 63

8 Annexure 64-68
 Abstract

Indian Post Office Savings Bank being the largest savings institutions in the country play a
vital role in mobilizing savings especially in the rural part of the country and offer numerous
benefits to the investors. Post office small saving schemes once hailed as people's movement
are losing sheen for the rural household. Postal saving system provide depositors an access to
bank, a safe and convenient method to save money and to promote saving. Investment culture
refers to the attitude, awareness and institutions in placing their savings in various financial
assets. Post office saving bank is the largest savings institutions in the country which
provides numerous benefits to investors. There are a number of attractive schemes, well
designed to meet the individual requirements of different investors.

For more than 150 years, the Department of Posts (DoP) has been the backbone of the
country’s communication and has played a vital role to connect the whole of the country and
has also provided banking facilities in the absence of banks. But over time, its role has
changed and it has grown to become one of the best avenues to channel investment from even
the wealthy investor and use them fruitfully in nation buildings activities. There has been
introduction of several types of deposit schemes that cater to the differing needs of different
classes of investors in which person has an option to invest even a minimal amount of Rs.500
per month. Investment in Post Office Savings account for a maximum investment of Rs.110,
000, per financial year is totally exempt from tax under section 80C of the Income Tax Act,
1961. The interest income is also exempted from tax under section 10 of Income Tax Act,
1961 in some cases. This has enabled them to compete successfully with the other avenues of
investment available to investor like commercial and co-operative bank, non-banking
financial institutions, public sector companies, etc. It is necessary for institutions offering
investment instruments to study the perception of investors’ towards various investment
instruments because it has influenced the saving behavior of investors since decade. The
study is an attempt to identify the awareness, preferences, problems.

1|Page
 Chapter 1

1.1 Introduction

Savings Bank being the largest savings institutions in the country play a vital role in
mobilizing savings especially in the rural part of the country and offer numerous benefits to
the investors. Savings shapes the important part of the economy of any nation. Saving is an
essential aspect of human being that helps in accumulating funds for stress free life regarding
financial health. Financial institutions like banks, insurance companies, mutual funds, post
office savings banks, companies etc. provides different types of financial instruments to an
individual to park his savings as per his requirements. Indian Post Office With the savings, in
various options available to the people, the money acts as the driver for growth of the
country. Indian financial prospect too presents a plethora of avenues to the investors. Though
certainly not the best or deepest of markets in the world, it has reasonable options for an
average individual to invest his savings. Investors needs to invest and earn return on their idle
resources and generate a specified sum of money for a specific goal in life and make a
provision for an uncertain future. Investment culture among the people of a country is an
essential prerequisite for capital formation and the faster growth of an economy. Investment
culture refers to the attitudes, perceptions, and willingness of individuals, and institutions
inflating their savings in various financial assets, more popularly known as investments or
Postal Savings.

A post office is a public department that provides a customer service to the public and
handles their mail needs. Post offices offer mail-related services such as acceptance of letters
and parcels; provision of post office boxes; and sale of postage stamps, packaging, and
stationery. In addition, many post offices offer additional services: providing and accepting
government forms (such as passport applications), processing government services and fees
(such as road tax), and banking services (such as savings accounts and money orders). The
chief administrator of a post office is called a postmaster. Prior to the advent of postal and
ZIP codes, postal systems would route items to a specific post office for receipt or delivery.
During the nineteenth-century, in the United States, this often led to smaller communities
being renamed after their post offices; particularly after the Post Office Department ceased to
permit duplicate station names within a state.

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 In India, post office savings scheme provides a secure, risk free and attractive investment
options for the small investors and offers the saving products across its 15,5000 post offices.
The post office saving bank is included in the union list which provides various scheme
framed by the Government. India has been divided into 22 postal circles; each circle headed
by a chief postmaster general and is further divided into regions comprising field units
headed by a post master general.

Several schemes were offered to serve the investment requirements of the people in rural
areas which include: Saving Bank Account, Recurring Deposit Account, Monthly Income
Scheme, Time Deposit Account, National Saving Certificate, Public Provident Fund, Senior
Citizens Saving Scheme and Sukanya Samriddhi Account. There are different types of
opportunities provided by many financial institutions like commercial banks, co-operative
banks, post office savings banks, life insurance corporation public limited company. Of all
the above mentioned institutions, Post Office Savings Bank play vital role. It provides
numerous benefits to the investors. Post office saving bank is the largest savings institutions
in the country. With a view to mobilizing savings of people with relatively small income and
circulating in them a spirit of thrift and savings, the Central Government has endeavored to
make the National Savings Movement popular by offering high returns than those given by
scheduled banks. There are a number of attractive schemes, well designed to meet the
individual requirements of different investors. Tax saving features of those schemes attracts
the higher income groups more than small savers. The investment avenues provided by the
post offices are generally marketable as they are a saving media. The major instruments of
post office schemes enjoy tax benefits such as exemption of investment contribution or
interest income from tax or both up to certain limits.

The strength of Indian post has long tradition of handling financial services in its
creditability and trust. In the rural areas people are unable to aware post office saving scheme
and many difficulties were faced while depositing money. Even today they are not aware of
the facilities extended by these schemes and the study attempt to analyse the motivational
factors encouraging investors to prefer post office saving schemes.

In India, the institutional framework for saving was started in 1834 when the first saving
bank was set up in Calcutta. But it takes momentum only after the enactment of the
Government Saving Bank Act in 1873 and Post Office Saving Bank of India in 1882. In 1886

3|Page
government merged the Government District Saving Banks with Post Office Saving Bank
(POSB).

After independence government set up the National Saving Organization in 1948 to use small
saving schemes as an important tool for meeting its financial requirement. Government also
enacted the National Saving Certificate Act-1959 and Public Provident Fund Act-1968 and
included the Post Office Saving Bank in the seventh schedule of the Indian Constitution.
Later on Deposit Scheme for Retiring Government Employees (1989), Deposit Scheme for
Retiring Employees of Public Sector Companies (1991) and contractual saving schemes,
namely General Provident Fund (GPF), Employees Provident Fund (EPF) and Employees’
Pension System were set up to promote savings in India.

With a view to mobilizing savings of people (especially small income group) and circulating
in them a spirit of thrift and savings, the Central Government through Ministry of finance has
endeavored to make the National Savings Movement popular by offering variety of saving
schemes to meet the individual requirements of different investors. Comparatively higher
secured returns than that of scheduled banks induced small investors and well-designed tax
saving features of these schemes has been successful in attracting the higher income groups
also.

Small saving schemes have been deign in India to provide safe and attractive investment
opportunities to the public and to mobiles resources for the economic development of the
country. At present, various operational small saving schemes are Post Office Savings
Account, Post Office Recurring Deposits, Post Office Time Deposits, National Savings
Certificate, Kisan Vikas Patra, Public Provident Fund, and Deposit Schemes for Retiring
Government Employees and Employees of Public Sector Undertakings. The maturity period
of the small saving schemes, currently in operation, varies from a very short period (saving
deposits) to over fifteen years (PPF). Certain schemes such as Post Office Savings Account,
Post Office Recurring Deposits, Post Office Monthly Income Scheme, and Post Office Time
Deposits are similar to commercial bank deposit schemes. Schemes like National Savings
Certificates and Kisan Vikas Patra have maturity fixed maturity period. Interest rates on the
small saving scheme are fixed by the Central Government from time to time.

These financial instruments represent medium term and long-term investment opportunities
and are good substitute, for other investment media such as bank deposits, debentures,
government securities, units and stocks from the point of view of spread of maturity, liquidity

4|Page
and safety. Many of them are in the form of reinvestment plans, carry tax benefits for those
who belong to the income-tax brackets. Through these small saving schemes government also
provides employment to about half a million persons who are working as licensed agents to
collect funds for these schemes, especially in rural and remote/far flung areas.

Besides providing services, such as mail delivery, money transfer post offices are providing
saving bank operations in the form Post Office Saving Bank Account (PSBA), Monthly
Income Account (MIS), Recurring and time Deposits (RD/FD), Senior Citizen Saving
Schemes (SCSS), Public Provident Fund, National Savings Certificate (NSC), Kisan Vikas
Patra (KVP) and Sukanya Samridhi Account (SSA), life insurance (PLI) and Jansuraksha
Yozana of the government across the length and breadth of the country.

5|Page
1.2 History of Postal System

During the pre-historic stage, the period of ancient mankind also called the Homo- Sapiens
who lived in the caves; there was no organized language of communication. They were left
with their natural language, which was the gift of God. They realized that for their survival,
they should have a companion and for their common cause, they should have a medium to
communicate with each other. They felt the need to exchange news from far and near. Later
on, during the period of empire rule, India was ruled by various Empires. It was necessary for
the Emperors to be informed of various happenings and developments on the various part of
their empire. This led to the evolution of postal system in India, but in a different form. It
helped them to be in constant touch with their subordinates.

In our country, references can be obtained from Atharvaveda that doots and pigeons were
sent to communicate messages. During the Mughal rule, a messenger post system was
introduced by Quth-Ud-din-Aybak. This was further expanded during the period of Alauddin
Khiliji in 1296. He expanded it into Dak Chowkis; a horse and foot runner service. This was
further advanced by Shersha Suri. He constructed the grand trunk road from Bengal to
Peshawar and the stretch covered 4800 km. It is mentioned in Tarik-i-Sher-Shkaki by Abbas
Khan Sherwani that the postal system Diwan-Insa employed nearly 3400 people to manage
1700 horse-relay stations at “Serais”, which also served as post offices. Two clerks (tarikh
nawis) were employed at “Serais” and the post was carried by Mewars. They were members
of a lower cast tribe. This system was retained and effectively used during the Mughal rule.

With the arrival of The East India Company, they established post offices in Mumbai,
Chennai and Kolkata from 1764 – 1766, each serving the Bombay, Madras and Calcutta
Provinces. During the regime of Warren Hastings governorship, postal service was made
available to the general public. A letter at that time costed 2 annas (one eighth of a rupee) for
a distance up to 100 miles. Payments would be done through copper tokens. The letter was
stamped post-paid if it was paid or bearing if not paid.

In 1839, North West province circle was formed and since then new postal circles were
formed as the need arose. In 1860 December, Punjab circle was formed. In 1861, Burma
circle was formed. In 1866 and 1869, Central province circle and Sind circle were formed. By
the end of 1880, six new circles were formed namely Oudh (1870), Rajputana (1871), Assam
(1873), Bihar (1877), Eastern Bengal (1878) and Central India (1879). Afterwards, the

6|Page
creation of new circle was accompanied by merging of some circles and by the end, there
were only 7 postal circles instead of 10. They were Bengal and Assam, Bihar and Orissa,
Bombay, Burma, Central Madras, Punjab and Uttar Pradesh.

Indian Postal Service is a government operated system in India. It owns the brand name
India Post. The common man refers to it as the “Post Office”. Large numbers are the result of
a long tradition of many postal systems which were attached to the Indian Union after
independence.

The Department of Posts comes under the Ministry of Communications and Information
Technology, Government of India. The Postal Services Board, the apex management body of
the department comprises the Chairman and six Members. The permanent invitees to the
board are Joint Secretary and Financial Advisor to the department who is a permanent invitee
to the board. The board is assisted by the senior officer of the directorate who acts as
Secretary to the board. At present, the Deputy Director General is assisting the board in this
capacity. The Deputy Director General, Directors and Assistant Director General provide
necessary support for the board at Headquarters. The Postal Services Directorate is the
Headquarters of organization located at Dak Bhawan, New Delhi. It oversees the operations
in the provision of postal services throughout the country. For the purpose of providing postal
services, the entire country has been divided into 22 postal circles. These circles manage the
daily activities of various Head post offices, sub-post offices and branch post offices through
Regional and Divisional level arrangements. Apart from the 22 postal circles, there is a
special circle formed as base circle to serve the postal needs of the armed force.

India has the largest postal network in the world. The country today has 155015 post offices
of which, 139144 are in rural areas and 23344 in urban areas. On an average, a post office
serves an area of 21.21 sq km and a population of 7175. The Postal Department has about
2.18 lakh departmental employees and about 2.76 lakh GarminDark Sevaks. India has been
divided into 22 postal circles, each circle headed by a Chief Postmaster General. The Postal
StaffCollege India (PSCD), Ghaziabad meets the training and development needs of Indian
Postal Service Officers and other Gazetted Officers.

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1.3 Indian Postal Service

Department of Post:

Type Agency of the Government of India

Founded 1764

Headquarters New Delhi, India

Key people Radhika Doraiswamy, Director General

Industry Postal system

Employees 520,191 (As of 2007)

Website http://www.indiapost.gov.in/

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1.4 Types of Post Office Deposit Schemes

Different Saving Products of Indian Post Office has been briefly discussed in this section.

1. Post Office Monthly Income Scheme (POMIS):

 Post Office Monthly Income Account is meant for those investors who want to
invest a lump sum and earn interest on monthly basis for their living.
 Unique scheme which offers guaranteed fixed monthly income on the lump sum
investment made by the investor.
 Any resident individual can open the MIS account in single or joint holding
pattern. A minor can also invest in this scheme. If minor is of more than 10 years,
then he can even operate the account.
 Minimum limit for investment is Rs.1500 and maximum investment limit is Rs.4.5
lakhs in single holding account and Rs.9 lakhs for joint accounts.
 This scheme currently offers a rate of interest of 7.7% per annum payable monthly
with the maturity period of 5 years. For example, Mr. Suresh invests Rs. 2 00,000
(or Rs 2 lakhs) in Post Office Monthly Income Scheme. He will receive Rs.1300
every month as an interest for 5 years. He will receive back the deposit on
completion of the tenure. Amount so received monthly can also be further invested
in post office recurring deposits.
 Investor can hold multiple accounts with maximum investment of Rs.4.5 lakhs by
combining balances in all the accounts. Joint accounts will have equal shares from
all holders. If we continue with the above example, Mr. Suresh would be able to
open a joint account with his wife for a maximum amount of Rs.2.5 lakh.
 The scheme also offers liquidity by allowing investors to withdraw the deposit
after 1 year. However, there will be a penalty of 2% on deposit if withdrawn
between 1 year-3 years and 1% penalty on withdrawals after 3 years.
 Accounts are transferable from one post office to another across the country.

2. Saving Account Scheme:

 Post office saving account is similar to a savings account in a bank.
 It is a safe instrument to park those funds, which you might need to liquidate
fully or partially at very short notice.

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  Post office saving bank account (POSB) is the oldest and most popular postal
saving instrument.
 Any individual can open a POSB A/C with a minimum balance of Rs-50/.
 A pass book is provided to the A/C holder and Cheque facility is also available
for POSB is 4per cent.
 This Account is regulated by The Government Savings Bank Act 1873.
 Only one account can be opened with one post office and can be transferred
from one post office to another.
 You can also open an account in the name of a minor. The interest rate is
4% and is fully taxable. However no TDS is deducted on the same.
 However a deduction of Rs 10,000 per annum is available on your total savings
account interest including post office savings interest under Section 80TTA of
the Income Tax Act, 1961.

3. Recurring Deposit account (RD):

 Recurring deposit account is a systematic way of saving money. The scheme is
meant for those investors who want to deposit a fixed amount regularly or
periodical basis.
 Offers a monthly investment option with a handsome return at the end of five years
with option to extend the account period.
 Insurance cover facility is also available with some conditions.
 Post office RD is basically a monthly investment for a fixed period of 5 years with
an interest rate of 7.3% per annum (compounded quarterly). On completion of the
fixed tenure of five years, RD account with Rs. 10,000 invested every month will
fetch you Rs. 7,25,051.
 After completion its tenure, account can still be continued for 5 more years on year
to year basis.
 Post Account RD helps a small investor by allowing them to invest as little as
Rs.10 per month and any amount in multiples of Rs.5. There is no upper limit for
the investment.
 Joint accounts can also be opened by two adult individuals. Account can also be
opened in the name of minor. Multiple accounts can also be opened.
 RD can be transferred from one post office to another.

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  There is default fee of 5 paise for every 5 rupee in case if you miss on any monthly
investment.
 The account offers flexibility by allowing a partial withdrawal upto 50% of the
balance after a year.
 There is no TDS on interest from post office RD. However, income is taxable in
the hands of investor as per their individual tax slab. It’s one of the best investment
choices for every investor who is looking for risk-free investment avenue to save
some amount every month systematically.

4. Time deposit account:

 Post office time deposit comes with different tenure options for investment.
 Post office offers time deposit for one year, two year, three year and five year.
 The minimum amount that can be invested is Rs. 200. There is no upper limit.
There is no restriction on the number of accounts one can hold.
 Accounts can be opened in single holding or joint holding pattern. An investment
in the name of minor is also allowed.
 Accounts can be transferred from one post office branch to another across India.
 Once the time deposit is matured, it will automatically renew for the same tenure
again with the prevailing rate of interest on the day of maturity.
 There is a tax benefit for the investment made in the 5 year post office time
deposit. The investment qualifies for the deduction under Section 80C of The
Income Tax Act, 1961.

Tenure Rate (Jan-March 2020)

1 year Time Deposit 5.50%

2 year Time Deposit 5.50%

3 year Time Deposit 5.50%

5 year Time Deposit 6.7%

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5. Monthly Income Scheme:
 Under this scheme the severs make a lump- sum deposit, which gives him a
monthly interest.
 The minimum deposit in case of single depositor is Rs 1000/ and in case of joint
depositor it is Rs 1500/.

6. National Savings Certificate:

 National Savings Certificate, popularly known as NSC, is a time-tested tax saving
instrument that combines adequate returns with high safe.
 This is a tax exempted certificate sold by post office with a minimum investment
of Rs 100/ and having no maximum limit. Trust and HUF are not allowed to invest
in NSC.
 The NSC has a maturity period of 5years. The NSC rate of interest is 8% per
annum compounded half yearly but payable at maturity. That means, your
investment of Rs 100,000 will yield you Rs.144,231 after 5 years.
 There is no maximum limit on investment with a minimum amount of investment
of Rs.100. Investments can be done in denominations of Rs.100, Rs. 500, Rs.
1,000, Rs. 5,000 and Rs.10,000.
 The NSC Certificate can be purchased in single holding or on behalf of a minor.
 Investment in NSC is tax deductible under Section 80C of The Income Tax Act.
Interest on NSC is deemed to also be reinvested under Section 80 C and hence tax
deductible, except interest in the final year of the NSC.
 NSC certificates can be pledged as security for availing bank loans.
 Certificates are transferable. Transfer from one person to another person is allowed
only once during the investment tenure.
 NSC is a risk-free and tax efficient saving scheme for long-term and traditional
investors with no risk appetite.

7. Public Provident Fund Scheme (PPF):

 Public Provident Fund, popularly known as PPF, is a saving cum tax saving
instrument. It also serves as a retirement planning tool for many of those who do
not have any structured pension plan covering them.

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  This is a tax advantage 15 years scheme with a minimum deposit of Rs.500 in a
financial year and a maximum of Rs.70,000/ per year. Withdrawal is allowed after
expiry of five years from the date of initial deposit.
 PPF is a long-term investment for a period of 15 years currently offered at an
interest rate of 8% per annum (compounded yearly).
 There is no minimum or maximum age of account opening.

 Investments are allowed with the minimum amount of Rs. 500 and maximum of
Rs. 1.5 lakhs in a financial year. Investments can be made in lump sum or in 12
equal instalments.
 Account can only be opened in a single holding form.
 You can invest in the name of minor also without exceeding your maximum limit
of investment by combining balances of all your accounts.
 Maturity period can also be extended to 5 more years on completing the period of
15 years. You can keep extending maturity in blocks of five years, indefinitely.
 PPF is a pure long term investment plan with premature closure facility allowed
only after 5 years from account opening and only for serious ailments or higher
education. Partial withdrawal is also permissible after the expiry of 5 years from
the end of the year in which the account is opened.
 Investor can avail loan facility from the 3rd financial year to the 6th year of
account opening.

8. Senior Citizens Savings Scheme (SCSS):

 Offers fixed investment option for senior citizens for a period of five years, which
can be extended, at a higher rate of interest that are paid in quarterly instalments.
 The minimum age of entry is 60 years for SCSS. Someone who has taken
voluntary retirement after 55 years of age can also open this account within a
month of receiving the retirement benefits. The amount invested in such cases
should not exceed the value of corpus received on retirement.
 Maximum limit of investment allowed per individual (combined balances in all
account) is Rs. 15 lakhs. The investment amount can be in multiples of Rs.1000.
 An individual can hold multiple accounts in his name or in joint holding with his
spouse.

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  Investment in PPF account qualifies for tax deduction under Section 80C of The
Income Tax Act. It also offers a tax efficient return as its interest is fully tax-free.
However you have to report PPF interest in your income tax return.
 It is a good scheme for investors who want to get the tax exemption along with
safety of principal and tax-free returns.

9. Kisan Vikas Patra (KVP):

 KisanVikasPatra is a saving certificate scheme in which the amount invested
doubles in 110 months (i.e. 9 years & 2 months).
 It is available in denominations of Rs. 1000, 5000, 10000 and Rs. 50000.
Minimum deposit is Rs. 1000/- and there is no maximum limit.
 KVP offers an interest rate of 7.7% compounded annually. It can be purchased
from any post office. The invested amount doubles every 112 months (9 years and
4 months).
 Investment is available in denominations of Rs.1,000, Rs. 5,000, Rs.10,000 and
Rs. 50,000. Investment comes with the minimum limit of Rs.1,000 and with no
maximum limit.
 Certificates are easily transferable and can be endorsed to third person.
 Certificate is comparatively liquid in nature as it offers encashment facility after
2.5 years of investment.
 There is no tax deduction on the principal amount invested and interest on the
KVP is also taxable. The scheme is thus not tax-efficient. It works for new and
small investors from remote areas who do not have access to other financial
products.

10. Postal Life Insurance:

 Besides above mention saving schemes the Indian post offering life insurance
services since 1884.
 Initially the service was limited only to the employee of post & telegram
department but due to its popularity the service was later on extended to the
employees of some other departments and banks also.
 It was opened for all people in the year 1995.

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11. Rural Postal Life Insurance:
 To extend the life insurance service to the rural public the post office extended the
service to rural areas in 1995.
 The prime objective of the scheme is to provide insurance cover to the rural public
in general and to benefit weaker sections and women workers of rural areas in
particular and also to spread insurance awareness among the rural population.

12. Sukanya Samriddhi Accounts (SSA):

 Sukanya Samriddhi Account Yojana offers a small deposit investment for the girl
children as an initiative under Beth Bachao Beti Padhao campaign.
 This yojana is to facilitate girl children proper education and carefree marriage
expenses.
 Sukanya Samriddhi is a scheme introduced for the benefit of the girl child. It
currently offers an attractive interest rate of 8.5% per annum compounded
annually.
 The minimum amount of investment is Rs.250 and maximum of Rs.1,50,000 in a
financial year. You have to invest at least the minimum amount every year for 15
years from the date of account opening. Thereafter the account will continue to
earn interest till maturity.
 Investment in the Sukanya Samridhhi Account is tax deductible under Section 80
C up to Rs 1.5 lakh per annum. The interest on the Sukanya Samriddhi Account is
also tax free and the maturity amount is tax free.
 Investment will mature after the completion of 21 years from the date of opening
the account or upon marriage of the girl child after attaining the age of 18. The
account will also have to be closed if the girl child becomes an NRI or loses her
Indian citizenship.
 Girl can also avail partial withdrawal facility (not more than 50% of the balance)
after attaining the age of 18 years.
 Parents/guardian can avail a tax benefit for the invested amount under Section 80C
of The Income Tax Act. Maturity proceeds are paid to the girl child and are
completely tax free in her hands.
 This scheme has gained lot of popularity especially in rural India. It’s a good
means to provide financial security to the next generation of women in the country.

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 Table 1: shows various Post Office Saving Schemes (POSS), interest rate, minimum and
maximum balance of it.

S. No. Name of Interest rates Minimum Maximum

service (in percentage) balance (in balance (in
rupees) rupees)
1 Post Office 4 500 No limit
Saving Account
2 Recurring 5.8 100 No limit
Deposit
Account
3 Time Deposit 5.50-6.70 1000 No. limit

4 Monthly 6.6 1000 4.5 lakh

Income Scheme
5 National Saving 7.8 100 No limit
Certificate
/Saving
6 Public 7.1 500 1.5 lakh per
Provident Fund annum
7 Senior Citizen 7.4 1000 15 lakh
Saving Scheme
8 Sukanya 7.6 250 1.5 lakh
Samriddi
Account
9 Kisan Vikas 6.9 1000 No limit
Patra

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1.5 Benefits of Post Office Savings Schemes

The saving schemes offered by India Post share some common features and benefits. Here
are some generic features one should know.

 Risk-free and reliable

Regardless of any related parameters, all post office savings schemes are government-
backed. Thus, they are considered risk-free investment options to park your funds.
 Easy to invest
The saving schemes are easy to enroll and are best suited for both rural and urban
investors. Anyone who wants to hedge risk in the portfolio for a fixed decent return
can invest in these schemes. The simplicity and availability make these investment
options a much-preferred savings cum investment option.
 Attractive return generation
The Ministry of Finance updates the interest rates of the post office saving scheme in
every 3 months. Presently, the next interest review is due in March 2020.
Nonetheless, the interest rate updates range between 4-9%, thus allowing investors to
receive substantial returns.
 Simple documentation process
Minimal documentation and simple application procedures offered by the post office
provide you with easy enrolment to any of the saving schemes. Limited
documentation and proper procedures in post office ensure that these saving schemes
are simple to opt for and safe to be locked onto as the government backs them.
 Long term investments
Most of the post office saving schemes is long term investments which can run up to
15 years. A long tenure, such as with PPF allows an investor to accumulate sizeable
fund over time. Thus, they can be considered as effective plans for financial security
as well as retirement benefits.
 Availability to investors across the economic strata
Postal investments are designed to cover investors from every corner of the country
and across different economic strata. With 1.55 lakh post office branches, from rural
to urban, every Indian citizen can avail these schemes.

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  Tax benefits
Tax efficiency is another highly acknowledged feature of post office saving scheme.
Some of the schemes such as National Saving Certificates come with tax exemptions
on deposit amount under Section 80C. Also, some schemes like Kisan Vikas Patra
offer tax deductions on the earned interest.
 Various types of product
Indian post saving scheme options are spread across different types of savings and
investment products to cater to various investors. The financial products are – savings
deposit, recurring deposit, fixed deposit, monthly scheme, saving certificates, etc.

1.6 How to Apply for a Post Office Saving Scheme

One can apply for any of the post office saving schemes with the following steps-

 Step 1: Visit your preferred post office branch.

 Step 2: Obtain the relevant account opening form for the chosen scheme from your
nearest post office. Nonetheless, you can also download these forms online from India
Post’s official website.
 Step 3: Fill up the form with necessary details and submit it along with your KYC
proof and photographs, and other documents if required as per your post office saving
scheme.
 Step 4: Complete enrolment by depositing the required amount as per your chosen
investment scheme.

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 1.7 Comparison of Various Post Office Savings Schemes

Scheme Interest Rate Minimum Maximum Eligibility Tax

Investment Investment Implications

Post Office 4% per annum –Rs 20 No limit Resident Indian, Tax-free

Savings (p.a.) minor and interest up to
–Non-
Account majors Rs 50,000
cheque
from the
facility – Rs
financial year
50
2018-19

Post Office First year – Rs 200 No limit Individual Tax benefits

Time 6.9% p.a. up to 5 years
Deposit under section
Second year –
Account 80C on
6.9% p.a.
(TD) deposits
Third Year –
6.9% p.a.

Fourth Year –
7.7% p.a.

Post Office 7.6% per Rs 1,500 For one Individual Interest

Monthly annum account earned is
Income payable holders – Rs taxable and no
Scheme monthly 4.5 lakh deduction
Account under Sec 80C
Joint
(MIS) for deposits
account
made.
holders – Rs
9 lakh

Senior 8.6% p.a. Rs 1,000 Maximum Individual of – Tax benefit

Citizen (Compounded deposit over age> 60 years or under section
Savings annually) the lifetime age >55 years 80C for

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Scheme allowed at who have opted deposits
(SCSS) Rs 15 lakh for VRS or
– TDS to be
superannuation
deducted on
interest earned
for more than
Rs 50,000 p.a.

15-year 7.9% p.a. Rs 500 per Rs 1.5 lakh Individual Tax rebate
Public (Compounded financial per financial under section
Provident annually) year year 80C for
Fund deposits
Account (maximum Rs
(PPF) 1.5 lakh p.a.)

National 7.9% p.a. Rs 100 No limit Individual Tax rebate

Savings (Compounded under section
Certificates annually) 80C for
(NSC) deposits
(maximum Rs
1.5 lakh p.a.)

Kisan Vikas 7.6% p.a. Rs 1,000 No limit Individual Interest is

Patra (KVP) (Compounded (Adult) taxable but no
annually) tax on the
amount
received on
maturity

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1.8 E-Post

In the recent past, Internet and e-mail have revolutionized the world of communications. At
the same time, accessibility to email continuous to be a major problem for many people,
especially in the rural areas. In its endeavor to make the benefits of e-mail available to
everyone and to bridge the digital divide, Department of Posts has introduced E-post service.
Through E-post customers can send their messages to any address in India with a
combination of electronic transmission and physical delivery through a network of more than
1,55,000 Post Offices. E-post sends messages as a soft copy through internet and at the
destination it will be delivered to the addressee in the form of hard copy. E-post costs just Rs.
10 per page of A4 size.

E-post can also be availed by the corporate customers, by having a business agreement with
India Post. Corporate customers will get special E-post rates and other value additions. The
E-Post Office of India Post offers variety of online Postal services to the users. One can avail
services – philately (purchase of stamps), PLI/RPLI (payment of premium) and eIPO
(purchase of postal order for RTI).

E-post is a service under which printed or even handwritten messages of customers are
scanned and transmitted as email through internet. At the destination offices, these messages
are printed, enveloped and delivered through postmen like other letters at the postal
addresses.

The E-post can be booked in two ways:-

1. Booking From a Post office:

 Customer to bring a hand written or printed message to any post office. It does not
matter in which language it is written.
 The message may be in text format, or may contain pictures or both.
 Any number of pages can be booked. However, no page should be more than A4 in
size (8.27" * 11.69").
 The name and address, with PIN code, of the addresses and sender should be clearly
and legibly written on top of the message. Messages can be sent to Postal addresses in
India only.
 The message can also be handed over in a floppy (only text for the time being), along
with clearly written address and email IDs, if any, of the addressees. Customer must

21 | P a g e
 ensure that the floppy is virus free. The size should be such as can be printed on an
A4 size paper.
 The post Office is not an E-post center, would scan the message and issue a receipt
for the tariff.
 In case the post office, if it is an E-post center, it would retain the message. The
payment would be in the form of postage stamps affixed on the top right of the
message sheet. The Post office will deface the postage stamps with the date stamp and
issue a receipt for the tariff to the customer. The Post office would put the message in
a closed service envelope and send it to designated E-post Centre for further
transmission electronically. Thus, E-post messages can be booked from any post
office in India, though its electronic transmission will take place only from E-post
Centers, to which these post offices are attached.

2. Booking from Customer's Home/Office:

 Customer has to buy an E-post prepaid cash card. These cards can be bought from
select Post Offices and other outlets in denominations of Rs.500 and 1000.
 Customer can access the E-post portal indiapost.nic.in and register as a user. Once
registered, messages can be written and easily sent by following the online
instructions.
 It is also possible now to print a message, including text and pictures, on the official
stationary, scan it and send the scanned image by E-post.
 The message can be sent simultaneously to up to 999 addresses in one go. An address
book can be created for this purpose, and this can be used later on also.
 E-post messages can be sent to any postal addresses in India and email IDs, anywhere
in World.
 Payment can be made online using the prepaid cash card only.

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 Post Office Latest News

Sr.No. Instruments Rate of interest w.e.f 01.04.2020 to 31.12.2020

01. Post Office Savings Account 4.0

02. 1 Year Time Deposit 5.5(Annual Interest R. 561 on Rs. 10000 deposit)

03. 2 Year Time Deposit 5.5(Annual Interest R. 561 on Rs. 10000 deposit)

04. 3 Year Time Deposit 5.5(Annual Interest Rs. 561 on Rs. 10000
deposit)
05. 5 Year Time Deposit 6.7(Annual Interest R. 687 on Rs. 10000 deposit)

06. 5 Year Recurring Deposit Scheme 5.8 Maturity value for Rs. 100 Dn. 5 Year =
6969.67
07. Senior Citizen Savings Scheme 7.4(Quarterly interest Rs. 185 on Rs. 10000
deposit)
08. Monthly Income Account 6.6(Monthly int. Rs. 55 on Rs. 10000 deposit)

09. National Savings Certificate (VIII 6.8(Maturity Value Rs. 1389 for Rs.1000
Issue) deposit)

10. Public Provident Fund Scheme 7.1

11. Kisan Vikas Patra 6.9 (will mature in 124 months)

12. Sukanya Samriddhi Account Scheme 7.6

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1.9 Covid-19 Impact on Interest Rates of Post Office Saving Scheme
The interest rates on small saving schemes have been slashed by the central government for
the April-June quarter of the financial year 2020-2021. The decision has come after the
Reserve Bank of India’s recent 75 bps cut in the interest rates at the time of economic fallout
due to COVID-19 Pandemic. Presently, the Ministry of Finance offers 9 types of small saving
schemes and the interest rates on these schemes are reviewed every quarter. The offered
schemes include Kisan Vikas Patra, Public Provident Fund (PPF), Senior Citizen Saving
schemes (SCSS) and Sukanya Samriddhi.
The latest rates of interest applicable on various small savings schemes for the quarter from
January to March 2021 effective from 1.01.2021 would be as below:
 The interest rate on Public Provident Fund (PPF) for the April-June quarter is now 7.1
percent. It has been brought down by 80 bps (basic points).
 The interest rate on Kisan Vikas Patra has been slashed down to 6.9 percent.
 For Sukanya Samriddhi Scheme, the interest rate for the quarter is now 7.6 percent.
 For National Saving Certificate Scheme, the interest rate by the government has been
brought down to 6.8 percent.
 For five-year recurring deposits, the interest rate has been lower down to 5.8 percent.
 For a five-year time deposit, the quarterly interest rate has been brought down to 6.7
percent.

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1.10 Post Office: Core Banking Solution (Internet Banking, Mobile
Banking, Mobile App)

India Post has a vision to be one of the leaders in providing banking and money remittance
services to the citizens of the country with a focus on the rural population. This vision
translates into the following strategy:

 Be the first choice in savings bank deposits schemes with innovative customer-centric
services
 Provide access to diverse financial services products thereby becoming the engine of
economic and social growth
 Increase operational efficiency through the induction of state of art technology.

The Department of Posts (DoP) has undertaken an end to end IT Modernization project
2012 to equip itself with requisite modern tools and technologies. In order to IT enable Post
Office Savings Bank, Core Banking Solution (CBS) is being implemented across India
covering all the post offices. Core Banking means a banking service facility in which we can
access our bank account and perform basic transactions like withdrawal or deposit of cash
from any of the member branches or any other bank for that matter. The Post office were
using computer but now are migrating from Sanchay Post to Finacle, Core Banking Solution
from Infosys.

CBS is networking of branches, which enables customers to operate their accounts, and
avail banking services from any post office on CBS network, regardless of where they
maintain their account. The customer is no more the customer of a particular post office.
Thus, CBS is a step towards enhancing customer convenience through Anywhere and
Anytime Banking. CBS / Postal Banking solution is part of the overall solution planned for
India Post, 2012 project.

The FSI (Financial Services System Integrator) will deploy the CBS solution in all post
offices (POs) and Circle Processing Centers (CPCs) as: Pilot- 8 circles with 112 Head Post
Offices, 12 MDGs, , and 8 Circle Processing Centers (in Karnataka, Maharashtra, Rajasthan,
Uttar Pradesh, Tamil Nadu, Assam, Andhra Pradesh and Delhi). Phase 1-All remaining Head
Post Offices, 759 Mukhya Dak Ghar and Lower Selection Grade Sub Post Offices, 750 Sub
Post Offices, and 14 Circle Processing Centres.Phase 2-2423 Mukhya Dak Ghar and Lower
Selection Grade Sub Post Offices and remaining Sub-Post Offices.

25 | P a g e
 Core Banking means a banking service facility in which we can access our bank account
and perform basic transactions like withdrawal or deposit of cash from any of the member
branches or any other bank for that matter. Initially banking activities were restricted to
account-holding branch only. For example, say if one had an account in Dena Bank, Mulund.
If he/she had to withdraw cash they would able to do so only from Mulund Branch i.e. one
cannot withdraw cash from any other branch. But today, if the one is holding the same
account in the same branch, he can withdraw money from any ATM or branch of Dena Bank
irrespective of the location. Even ATMS of other banks can be used for the same purpose.

Similar to Banks, Post offices are also moving to Core Banking that means you can perform
transactions from any of the Post offices in India. As on February 22, 2016, 17,057 post
offices are utilizing Core Banking Solution. Core Insurance Solution is rolled out in 805 head
post offices and the corresponding sub offices. 510 ATMs have been installed.

During the earlier times each branch had its own computer and transactions were automated
on that computer only. This is called as Total Branch Automation. Consolidation of data of
various branches was done at Head Office in a decided periodicity. With advancement in
technology all the computers of all the branches were connected to a single computer at the
main centre and transactions were recorded centrally. This concept is core-banking.

Sanchay Post is a LAN (Local Area Network) based application. CBS on the other hand is a
centralized application with browser based interface. There is no need for servers at the post
office level for running CBS. CBS will have the following features which are not available in
Sanchay Post: real-time 24x7 processing capability, centralized database, availability of
alternate channels, capture of KYC (Know Your Customer) details, adequate audit &
inspection features etc.

Financial inclusion is the delivery of financial services at affordable costs to sections of

disadvantaged and low income segments of society. Unrestrained access to public goods and
services is the sine qua non of an open and efficient society. It is argued that as banking
services are in the nature of public good, it is essential that availability of banking and
payment services to the entire population without discrimination is the prime objective of
public policy.

India Post is already handling the Government’s sponsored schemes like Mahatma Gandhi
Rural Employment Guarantee Scheme (MGNREGS) and micro finance through NABARD.

26 | P a g e
CBS will ensure that service delivery becomes more effective and new services/schemes can
be introduced more conveniently and in a reduced time frame. India Post through its network
of rural network will become a one stop for delivering various financial schemes of the
Government. Better implementation of small savings schemes as per terms and conditions,
reducing possibilities of irregularities while transacting business under small savings
schemes.

Financial inclusion is the delivery of financial services at affordable costs to sections of

disadvantaged and low income segments of society. Unrestrained access to public goods and
services is the sine qua non of an open and efficient society. It is argued that as banking
services are in the nature of public good, it is essential that availability of banking and
payment services to the entire population without discrimination is the prime objective of
public policy. India Post is already handling the Government’s sponsored schemes like
Mahatma Gandhi Rural Employment Guarantee Scheme (MGNREGS) and micro finance
through NABARD. CBS will ensure that service delivery becomes more effective and new
services/schemes can be introduced more conveniently and in a reduced time frame. India
Post through its network of rural network will become a one stop for delivering various
financial schemes of the Government. Better implementation of small savings schemes as per
terms and conditions, reducing possibilities of irregularities while transacting business under
small savings schemes.

Need for Core Banking Solution

Anytime-Anywhere banking means that the banking customers can make inquiries and
transaction at any location and at any time via multiple channels like ATM, internet banking,
phone banking, SMS etc.

1. Improve operational efficiency - reduce cost of operations:

Core Banking will provide various alternative delivery service channels, which reduce
cost and time taken for the transactions. Currently banks‟ counter transaction costs
are around Rs. 45-50 per transaction. On the other hand, the transaction cost of
withdrawal from an ATM is Rs. 15-18. For net banking, the cost is Rs 4 per
transaction. The centralized process of core banking will also improve efficiency by
avoiding duplication of work in post offices from Branch Office (BO) to Sub Post
Office (SO) to Head Post Office (HO).

27 | P a g e
 2. Improve customer service:
Core Banking will improve customer services by providing services through alternate
channels on 24 x 7 bases – ATM, Internet, Phone, SMS and Mobile Banking.
Customers would be able to operate their accounts, and avail banking services from
any post office on CBS network, regardless of where they maintain their account.
3. Comply with Anti Money Laundering (AML) / Know Your Customer (KYC)
requirements:
It is easy to comply with anti–money laundering norms through core banking. The
AML norms require the post office to detect when a customer has opened multiple
accounts. This is not possible in Sanchay Post. Moreover, compliance with KYC
norms is required to issue debit cards to the customers.
4. Integrate with electronic payment systems:
Integration with electronic payment systems will allow Department of Post to
participate in an inter-operable electronic payment network run by the National
Payments Corporation of India. This will help in quick and safe transfer of funds
through National Electronic Fund Transfer (NEFT) and Real Time Gross Settlement
(RTGS)

Objective of Core Banking Solution

The key objectives are as below:

 To increase the number of customers

 To provide multiple delivery channels like internet, mobile banking, ATMs, thereby
bringing access to financial services to the doorsteps of the customers
 To enable faster money fund transfers to reach out to more customers
 To become one stop solution for financial inclusion initiatives of the Government of
India

28 | P a g e
 Benefits of Core Banking Solution

 Anytime and Anywhere banking (online mediums / SMS)

 Standardized, simple and automated processes
 Increase in quality of the service provided to the customers
 Timely and accurate information for management decision making
 Strong audit and internal controls
 Bring down the cost of transaction and thereby improving operational efficiency
 Paving way for new value added services thereby generating additional revenue for
the Department

1.11 Norms for various Postal Services

Department of Posts is proud to have the largest postal network in the world. Our service area
continues to expand to reach people even in hilly, difficult and inaccessible terrains. At the
same time there is a continuous endeavor to improve our services/operations with innovative
ideas and induction of technology. Our commitment towards rendering better service
emanates from our Mission. Our Mission guidelines are:

 Total dedication to understanding and fulfilling customer needs.

 Total devotion to providing efficient and reliable service which the customers
consider to be value for money.
 Total commitment to providing challenging and rewarding career for every employee.
 Total recognition of the responsibilities as a part of the social, industrial and
commercial life of the country.
 Total enthusiasm to be forward looking and innovative in all areas.

The Department has formulated and implemented in all major offices its citizen's charter,
which is an expression of our commitment towards improving our services offered to make
them more efficient and responsive and at the same time making our working more
transparent to our valued customers. The citizen's charter is an attempt to bring the
Department closer to its customers.

29 | P a g e
1.12 Statement of Problem

Among all the above institutions, Post Office Savings Bank schemes play a vital role. It
provides numerous benefits to the investors. Post office saving bank is the largest savings
institution in the country. With a view to mobilizing savings of people with relatively small
income and circulating in them a spirit of thrift and savings, the central Government has
endeavored to make the National Savings Movement popular by offering high returns than
those given by scheduled banks. There are a number of attractive schemes, well designed to
meet the individual requirements of different investors. Tax saving features of those schemes
attracts the higher income groups more than small savers. The investment avenues provided
by the post offices are generally marketable as they are a saving media. The major
instruments of post office schemes enjoys tax benefits such as exemption of investment
contribution or interest income from tax or both up to certain limits. Most of the investors are
influenced to make investment in post office deposits schemes for tax benefits purpose only.
Nowadays people are interested to invest their money only in banks compared to post office
deposits schemes which has led to a reduction of deposits in post offices. The slashing of
commissions to agent has further aggravated the problem of collection.

1.13 Mission

The mission of the Department of Posts is as under:

 To sustain its position as the largest postal network in the world touching the lives of
every citizen in the country.
 To provide mail, parcel money transfer, banking, insurance and retail services with
speed and reliability.
 To provide value-for-money services to the customers.
 To ensure that the employees are proud to be its main strength and serve its customers
with a human touch.
 To continue to deliver social security services and to enable last mile connectivity as a
Government of India platform

30 | P a g e
 Chapter 2
RESEARCH METHODOLOGY

2.1 Research statement

“Post Office Saving Schemes as an Investment”

2.2 Objective of the study

 To know the various saving schemes of post office

 To study the problem faced by depositors in depositing in Post Office Deposits
Schemes.
 To study the investors opinion regarding tax benefits and returns from Post Office
Deposits Schemes.
 To find out the sources of awareness by which public get aware about various
schemes

2.3 Scope of the study

The study will be helpful to postal department authorities, financial institutions and
academician in understanding the perception and satisfaction towards postal saving schemes.
The findings of the study will immensely help the financial experts designing and for
introduction of innovative saving schemes as per the customers and their demographic and
socioeconomic status and also in overcoming the issues faced the household savers of post
office savings schemes.

2.4 Limitations of the study

 This study is restricted to the urban population only.

 This study is confined to a particular select region, and hence conclusions are drawn
with due care when an attempt is made to generalize the result.
 Due to paucity of time, the size of the sample is restricted to 60.
 As this study is concerned with financial matters, investor’s reluctance to disclose
information on some items in the questionnaire had to be encountered

31 | P a g e
2.5 Need of Study

To know the customer perception in the post office saving scheme, it contains different type
of customer’s satisfaction level, their expectations and interest. What kind of problems
customers facing in post office. To know the customers age, annual income, gender, and
scheme type, this is the need to this study.

2.6 Sample size

The study covers only the selected various investors. In this study stratified random sampling
technique has been used and 60 customers were selected on random basis.

2.7 Tools and Techniques

The following tools and techniques are used for the present study:

 Percentages
 Pie charts

2.8 Data collection

Primary data:

Primary data is collected with the help of executing the questionnaires. The data was
collected to get primary data from consumer of post office. The questionnaire is used as a
best tool for collecting primary data from post offices.

Secondary data:

The study is based on secondary data which is collected from secondary sources via various
journals magazine, newspaper and annual reports and websites of post office and through
various search engines the data is classified into primary and secondary data.

32 | P a g e
 Chapter 3

Literature Review

Psychological appeal of small savings schemes provides an opportunity for ordinary investors
to invest their savings. So simplified investment procedure and higher interest rates are
required to cater the needs of illiterate and socially downtrodden community. Investors Voice
opines that post office investors belong to a separate class. It has been recognized that the
post office savings schemes is the oldest in the country; are the safety investment avenues
and hence attract those classes of investors like senior citizens house wives ,institutions trust
etc. The post office savings schemes are relatively inflexible but those who do don`t care
much of risk reward equation have traditionally been plumbing for the post office saving with
the sole criterion of the security of investment.

Tamilkodi (1983):
Has stated that small savings schemes have a psychological appeal and it provides an
opportunity for ordinary men, women, and even children to park their savings. It reaches a
large number of people and covers a wide range of areas. She also suggested that efforts
should be taken to simplify the procedure of small savings schemes to suit the needs of
illiterate and socially downtrodden people. Further, she suggested an increase in the rate of
interest of small savings schemes to meet the challenges of commercial banks.

Mukhi (1989):
Has revealed that National Savings Certificate (NSC) has been one of the most popular tax
savings instruments in this country. He has stated that contractor and others who have to
provide security while bidding for contracts finds it extremely convenient to buy NSC and
pledge these to the appropriate authorities while earning 8 per cent per annum on the pledged
securities. He also stated that the major attraction of NSC is its simplicity. Even the average
investor does not have to scratch his head to understand the scheme.

Gavini and Athma (1999):

Found that social considerations, tax benefits, and provision for old age were the reasons
cited for saving in urban areas, whereas provision for old age was the main reason in rural

33 | P a g e
areas. Among the post office schemes, Indira Vikas Patra (IVP), KVP and Post Office
Recurring Deposit Account (PORD) were the most popular, in both urban and rural areas.

Karthikeyan (2001):
Conducted a research on Small Investors' Perception on Post Office Saving Schemes and
found that there was significant difference among the four age groups, in the level of
awareness for Kisan Vikas Patra (KVP), National Savings Schemes (NSS), and Deposit
Scheme for Retired Employees (DSRE), and the overall score confirmed that the level of
awareness among investors in the old age group were higher than in those of the young age
group. No difference was observed between male and female investors except for the NSS
and KVP. Out of the factors analyzed, necessities of life and tax benefits were the two major
ones that influence the investors both in semi-urban and urban areas. Majority (73.3 per cent)
of investors of both semi-urban and urban areas were very much willing to invest in small
savings schemes in future provided they have more for savings.

Preeti Singh (2002):

Stated that post office schemes were generally like the post office deposits schemes and
commercial bank schemes. They have a saving account, a recurring deposits account, time
deposits account which is also recurring in nature. The saving account functions in the same
way as commercial banks through cheques and there is no restriction on withdrawals.

Richa (2004):
In her study argued that the Post office continues to be a major attraction for savers. Finance
Ministry officials say that the attraction for the Post office deposit schemes stems from the
higher interest rate they offer vis-à-vis what banks give.

Dr.R.Ganapathi (2010):
Studied that various Small Saving Schemes were mainly meant to help the small investors
and also those who are in high tax brackets. The study concluded that proper advertisements
must be made for Post Office Savings Schemes, So that even a layman could know about
these Schemes and deposits can be increased. They stated that investing their amount in Post
Office deposits provides safety and security for the amount invested.

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Mathumitha (2015):
Pointed out that a post office savings schemes give a secure, risk free and more investment
option for small investors. She suggested that latest technology be incorporated in post office
to serve the public in an effective and efficient manner, through by reducing the transaction
time and rate of interest offered by the post office should be increased.

KoreShashikant and Teli (2015):

Stated that the customer’s attitude and perception towards post office savings schemes in
Kolhapur district. The study found that Investor gives top priority to safety for their deposits
hence next investment priority goes to nationalized bank. The result of the study concluded
that there is a need to increase financial awareness about postal schemes, competitiveness,
fast decision making, marketing activities and strategic planning to fight against private
institutions.

Rakesh and Nalina (2017):

This study aimed to know and understand the individual investor behaviour. The study found
that portfolios of investors, investment preferences, risk perception, investment pattern,
awareness level, problems affecting investment behavior and problems encountered by the
investors. The result of the study concluded that diversification of financial sector will give
different varieties of investment opportunities to the individual investors.

Bhatia and Tyagi (2018):

Revealed the effects of Some Socioeconomic factors such as Income, Age, Level of
Education, size of family on one’s saving patterns. The study found that the level of savings
is still poor due to low income, large family size or more number of dependents, joint family
system and young working population.

Vembu (2018):
Revealed that more of rural women are interested in investing their savings in investing their
savings in post office because of proximity of post office situated in their residing location.
He also stated that the officials create awareness to rural people for investing their money in
post office it creates a growth of postal sector. Most of the investors are invest in post office
savings schemes only for tax relief.

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Holosagi (2018):
Said that investors motivational factor for investment in postal is to meet domestic purpose
and to be secure at old age and their prefer regular and safety, local access ability and easy
manageability. He suggest that government can create more awareness among rural people
about the postal investment schemes and its benefits avail through it as it has not reached the
people properly

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 Chapter 4
Data, Analysis and Interpretation

1. Gender

Female
42%

Male
58%

Male Female

Interpretation:

The above pie chart represents that the number of male respondents is 58% and female
respondents is 42%

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 2. Age

13%

38%

32%

17%

Below 30 31-40 41-50 Above 50

Interpretation:

The maximum number of respondents lies in the age group of below 30years, followed by
41-50 years, then 31-40 years and lastly above 50 years.

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 3. Annual Income

13%

49%

38%

2-4 lakhs 5-10 lakhs Above 10 lakhs

Interpretation:

The above chart represents that the annual income of 49% of respondents is between 2-4
lakhs, followed by 38% of respondents having annual income between 5-10 lakhs and 13% of
respondents hold annual income above 10 lakhs.

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 4. How much percentage of annual income that would you prefer to invest?

Above 50
40-50 3%
10%

Below 20
32%

30-40
25%

20-30
30%
Below 20 20-30 30-40 40-50 Above 50

Interpretation:

The above pie charts refers that about 32% of respondent prefer to invest below 20% of their
annual income, followed by 30% of respondent prefer to invest their 20-30% of annual
income. About 25% of respondents prefer to invest 30-40% of their annual income, 10% of
respondent prefer to invest 40-50% of their annual income and about 3% of respondents
prefer to invest their 50% of their annual income.

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 5. Are you aware of investment options?

29%

71%

Yes No

Interpretation:

The chart above represents that most of the respondents i.e. 71% are aware of investment
options and about 29% of respondents are not aware of any investment options.

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 6. Your source of information for investment is?

7%
25%
23%

15%
15%
15%
Internet Advertisement Newspaper and magazines Financial consultant Friends/Colleagues Other

Interpretation:

More about 25% of respondents got their investment information from the internet, 23% got
information from friends or colleagues, 15% of respondents got their information from
advertisements, newspaper & magazines and financial consultants and 7% of respondents got
information from other sources.

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 7. Investment feature you look into while taking investment decision.

Others
Liquidity 2%
12%

Safety
28%

Tax benefits
35%

Higher returns
23%

Safety Higher returns Tax benefits Liquidity Others

Interpretation:

The above pie chart clearly represents that 35% of respondents look for tax benefits while
taking investment decision, 28% prefer safety in any investment option, 23% look for higher
returns, 12% prefer liquidity and 2% of respondents look for other feature while investing.

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 8. What’s your preference toward financial products?

5%

23%

47%

25%

Post office Bank Mutual funds Other

Interpretation:

47% of respondents prefer to invest in post office, 25% of respondents prefer bank option to
invest, and 23% of respondents opt for mutual funds as their investment option and 5% in
other options available out.

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 9. Any possession of post office schemes?

25%

45%

30%

Yes No Thinking to invest in future

Interpretation:

Out of the total respondents 45% of respondent have invested in post office, 25% respondents
are thinking to invest in future in post office and 30% of respondents prefer other financial
options.

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 10. Factors influencing to invest in post office.

Attractive rate of
interest
8%
Easily transferable
9% Tax free interest
28%

Safe, secured and

risk free investment
55%
Tax free interest Safe, secured and risk free investment Easily transferable Attractive rate of interest

Interpretation:

The above pie chart represents that 55% of respondents invest in post office for its safe,
secured and risk free investment. 28% respondents invest at post office as it offers tax free
interest, 9% respondents invest because it is easily transferable and 8% invest because of its
attractive rate of interest.

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 11. Purpose of investment

3%
15%
27%

12%

43%

Profit Future emergency Tax benefits Child’s marriage/education Other purpose

Interpretation:

The chart above clearly shows that 43% of respondent’s purpose of investment is future
emergency, 27% respondents invest for earning profit, and 15% of respondents investment is
for their child’s marriage or education purpose, 12% invest for tax benefits and 3% invest of
some other purposes.

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 12. Variables having negative impact on post office savings.

Other
10%

Poor awareness
Low returns 37%
20%

Less attractive
33%

Interpretation:

Poor awareness is the main negative impact of post office saving schemes and 37% of
respondents feel the same. 33% of respondents find post office saving schemes less attractive,
20% respondent’s feels that receive low returns from post office savings and 10% have other
reasons.

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 13. What would you do when the post office saving schemes attains its maturity?

Retain the
investment
Renew the
15%
investment in
same scheme
28%

Invest in other
investment
alternative
20%

Invest in
alternative post
office saving
schemes
37%

Interpretation:

The above pie chart shoes that 37% respondents would invest their post office savings in an
alternative saving scheme in the post office itself once it attains maturity, followed by 28% of
respondents would renew the same investment scheme, 20% would invest in other investment
alternative and 15% respondent’s would retain their investment.

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 14. Criteria of selecting an agent

21%
27%

17%
35%

Personal relationship with agent Performance of agent Facilities offered by the agent Other factors

Interpretation:

According to 35% of respondents the main criteria for selecting an agent for investment is the
performance of the agent, followed by 27% of respondent has other factors while selecting an
agent, 21% respondents has personal relationship with the agent and 17% respondents goes
by the facilities offered by the agent.

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 15. Satisfaction level of your present investment.

Neutral
32% Satisfied
40%

Unsatisfied
28%

Satisfied Unsatisfied Neutral

Interpretation:

The chart shows that 40% of respondents are satisfied with their present investments. 28%
respondents are unsatisfied and 32% respondents are neutral about their investment.

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 16. Have you closed any account prematurely?

29%

71%

Yes No

Interpretation:

About 71% of respondents have closed their accounts prematurely and 29% respondents have
not closed it.

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 17. Major problem faced by you while making deposits in post office saving schemes.

Others Delay in
10% processing
20%

Lack of
information
37%

Lack of
customer
friendly
attitude
33%

Interpretation:

The pie chart shows that the major problem faced while making deposit in post office saving
schemes is lack of information provided and 37% of respondents agree for it. 33% of
respondents feel lack of customer friendly attitude, 20% respondents faced delay in
processing and 10% respondents have other issues.

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 18. Do you feel post office saving schemes is better than other option?

Low returns
25%

Yes
53%

No
22%

Yes No Low returns

Interpretation:

53% respondents feels that investment in post office saving schemes is better options than

others, 25% respondents feel that post office saving scheme has low returns and 22%

respondents think that post office is not a better option than other.

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 19. What is your experience of investing in post office saving schemes?

32% 28%

40%
Faced losses Earned profit Neither profit nor loss

Interpretation:

The above pie chart represents that 40% of respondents have earned profit by investing in
post office saving schemes, 32% respondents have neither earned profit nor faced loss by
investing in post office saving schemes and 28% respondents have faced loss by investing in
post office saving scheme.

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 20. Have you ever used E-post?

40%

60%

Yes No

Interpretation:

Above pie chart shows that 60% of respondents are aware of E-post and are using it too and
40% of respondents are not using it.

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 21. Do you prefer to invest for long term or short term?

Short term
37%

Long term
63%

Interpretation:

63% of respondents prefer long term investment options and 37% respondents prefer short
term options.

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 22. Which of the following mode did you use to register your complaints?

17%

46%

37%

Phone call Email support Letter and faxes

Interpretation:

Phone calls are the major mode to register any complaints and the above chart clearly shows
that phone calls are used by 46% respondents to register their complaints, followed by 37%
respondents use email support to register their complaints and 17% respondents prefer letter
and fax to register their complains.

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 23. Did COVID pandemic affect your investment choices?

Maybe
18%

Yes
49%

No
33%

Interpretation:

The above pie chart represents that Covid-19 pandemic have affected investment choices of
49% of respondents and 33% respondent says that pandemic has not affected their investment
choices and 18% are not sure whether pandemic has affected their choice of investment.

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 Chapter 5

Conclusion and Suggestion

5.1 Conclusion

In India, there are various investment schemes and opportunities available for individuals. It
is concluded that though the role of Indian Post Office which has a large history and has been
inducted into the minds of every Indians, still it required some sort of feeding and proofing.
Primarily they undertake the responsibility of savings of Indian postal investors and secondly
they help the nation to generate the necessary funds resulting in the societies getting overall
benefits. A prime role should also be played by the private corporate in order to induce with
fresh blood for its survival.

Post office saving scheme plays an important role in the development of economy as it
offers an opportunity for poor and people belonging to rural areas to invest in various
schemes. It connects the rural areas with rest of the country and also provides banking
facilities in the absence of bank in rural areas

Study discloses that Post office saving banks in India differentiated its offer by building a
unique bundle of competitive advantage. Post office saving schemes is still preferred by
investors as it is fully backed by government and functioning for long. The trust is high in
investors where safety of the deposited money is more important issue than the returns on
investment.

The only problem lies is that it is not taking strong steps to deliver and communicate the
desired position to target customers. Post office therefore, has to re-orient its services and
offer better schemes to attract more number of investors.

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5.2 Findings

 Demographic factors have no significant influence over sources of awareness and

problem faced regarding Post Office Deposits Schemes except monthly income.

 Demographic factors have no significant influence over the opinion towards Post
Office Deposits Schemes except monthly income and educational qualification.

 Monthly income and educational qualification have significant influence over the
opinion, source of awareness and problem faced regarding Post Office Deposits
Schemes which shows that higher monthly income group people were least like to
invest in post office.

 Majority of the respondents invest in post office deposits schemes for the purpose of
safety and security. Deposits Pledged is least preferred by the investors.

 The level of awareness of the respondents about various Deposits schemes are very
low except Recurring Deposits and Post Office Saving Bank A/C due to this majority
of the respondents have invested only in Recurring Deposits, Post Office Saving Bank
Account and Post Office Monthly Income Scheme. Very less number of respondents
has invested in other schemes. Though the level of awareness of the respondents
regarding Post Office Deposits Schemes is low but majority of the respondents has
good opinion about it. This shows people like to deposits in Post Office Deposits
Schemes.

 The major problems faced by respondents while depositing in post office deposits
schemes were low rate of return.

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5.3 Suggestion

 More awareness must be created among the people about the schemes introduced. The
rate of interest offered by the post office should be increased.

 Tax benefits are attached only too few schemes in post office but also can be extended
too many schemes.

 Lack of Advertisement in postal services, the government has to take necessary steps
to adopt advertisement strategy in wider range.

 Latest technology should be incorporated in post office to serve the public in an

efficient manner, thereby reducing the transaction time.

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 Chapter 6

Bibliography and Webliography

Bibliography:

 Karthikeyan, B., (2001), 'Small Investors' Perception on Post Office Small Savings
Schemes', unpublished thesis, Madras University, Tamilnadu, India.
 Tamilkodi, A.P.P., (1983), 'Small Savings Schemes in Tamil Nadu: A Trend Study
(1970-80)', unpublished thesis, University of Madras, Tamilnadu.
 Dr.R.Ganapathi(2010) ,` Investers attitude towards post office deposits schemes’ in
BVIMR
 Management Edge , vol. 3, no.2, pp 26-45
 Singh Preeti, “Investment Management”, Security analysis and Portfolio
Management, Himalaya Publishing House, Ninth Revised Edition Delhi, 2002.

Webliography:

 https://www.indiapost.gov.in/Financial/pages/content/post-office-saving-
schemes.aspx
 https://groww.in/p/savings-schemes/post-office-saving-schemes/
 https://economictimes.indiatimes.com/wealth/invest/post-office-deposit-schemes-
interest-rates/articleshow/67416155.cms
 https://www.epostoffice.gov.in/
 https://www.relakhs.com/latest-post-office-small-saving-schemes-interest-rates-jan-
mar-2021/

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 Annexure

1. Gender
o Male
o Female
o Others

2. Age
o Below 30
o 31-40
o 41-50
o Above 50

3. Annual income
o 2-4 lakhs
o 5-10 lakhs
o Above 10 lakhs

4. How much percentage of annual income that would you prefer to invest?
o Below 20
o 20-30
o 30-40
o 40-50
o Above 50

5. Are you aware of investment options?

o Yes
o No

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6. Your source of information for investment is?
o Internet
o Advertisement
o Newspaper and magazines
o Financial consultant
o Friends/Colleagues
o Other

7. Investment feature you look into while taking investment decision

o Safety
o Higher returns
o Tax benefits
o Liquidity
o Others

8. What’s your preference toward financial products?

o Post office
o Bank
o Mutual funds
o Other

9. Any possession of post office schemes

o Yes
o No
o Thinking to invest in future

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10. Factors influencing to invest in post office
o Tax free interest
o Safe, secured and risk free investment
o Easily transferable
o Attractive rate of interest

11. Purpose of investment

o Profit
o Future emergency
o Tax benefits
o Child’s marriage/education
o Other purpose

12. Variables having negative impact on post office savings

o Poor awareness
o Less attractive
o Low returns
o Other

13. What would you do when the post office saving schemes attains its maturity?
o Renew the investment in same scheme
o Invest in alternative post office saving schemes
o Invest in other investment alternative
o Retain the investment

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14. Criteria of selecting an agent
o Personal relationship with agent
o Performance of agent
o Facilities offered by the agent
o Other factors

15. Satisfaction level of your present investment

o Satisfied
o Unsatisfied
o Neutral

16. Have you closed any account prematurely?

o Yes
o No

17. Major problem faced by you while making deposits in post office saving schemes
o Delay in processing
o Lack of customer friendly attitude
o Lack of information
o Others

18. Do you feel post offices saving schemes are better than other option?
o Yes
o No
o Low returns

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19. What is your experience of investing in post office saving schemes?
o Faced losses
o Earned profit
o Neither profit nor loss

20. Have you ever used E-post?

o Yes
o No

21. Do you prefer to invest for long term or short term?

o Long term
o Short term

22. Which of the following mode did you use to register your complaints?
o Phone call
o Email support
o Letter and faxes

23. Did COVID pandemic affect your investment choices?

o Yes
o No
o Maybe

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