Post Office Compared To Banks
Post office has always been the preferred place to deposit ones savings owing to the instinctive smugness in a country like India where "prevention has always been better galore". The concept of investing in instruments of high risk has started seeping in, but mostly into the urban educated people. A majority of 74 % of the rural population still prefers to deposit their savings in a post office rather than a bank on the basis of the indispensable security of assets it offers. The low-income levels also prevent them from taking any sort of risk, in relation to the hard earned bucks. Call it superstition or aversion to change it is difficult to convince a villager into investing into the bank and not the local post office. The post office officials have achieved near demi god status owing to the long-term relationship and impact the post office has had in their lives for decades. In modern marketing terminology it can be termed as an unrefined brand that exists only among the risk averse people per se.
This is obvious from the fact that small savings collections figures are buoyant. Savings products like the post office monthly income plan, Kisan Vikas Patra, National Savings Certificate, and even post office time deposits are seeing increased collections as investors shun traditional bank and company deposits. During the same period last year, small savings collections increased 19.3 per cent over the previous year to Rs 50,484 crore. Small investors are particularly enamored of the post office monthly income plan, which offers returns of 8 per cent per annum, with a kicker of a 10 per cent bonus on maturity. However, despite the Rs 3 lakhs maximum investment limit for an individual in this plan, new investors are attracted. Besides, new maturities have also added to the increased funds flow in small savings.
Also, as bank deposits yields have fallen, more investors are shifting their deposits to post office time deposits. Company deposits, which used to be popular a few years ago, have all but vanished. The few that are still around don't seem worth a look. The National Savings Certificate too, which is similar to the PPF in its section 80L and 88 tax benefits, is also seeing a surge in collections. This is because investors want to lock in to an interest rate in a falling interest rate scenario.
Post office has always been the preferred place to deposit ones savings owing to the instinctive smugness in a country like India where "prevention has always been better galore". The concept of investing in instruments of high risk has started seeping in, but mostly into the urban educated people. A majority of 74 % of the rural population still prefers to deposit their savings in a post office rather than a bank on the basis of the indispensable security of assets it offers. The low-income levels also prevent them from taking any sort of risk, in relation to the hard earned bucks. Call it superstition or aversion to change it is difficult to convince a villager into investing into the bank and not the local post office. The post office officials have achieved near demi god status owing to the long-term relationship and impact the post office has had in their lives for decades. In modern marketing terminology it can be termed as an unrefined brand that exists only among the risk averse people per se.
This is obvious from the fact that small savings collections figures are buoyant. Savings products like the post office monthly income plan, Kisan Vikas Patra, National Savings Certificate, and even post office time deposits are seeing increased collections as investors shun traditional bank and company deposits. During the same period last year, small savings collections increased 19.3 per cent over the previous year to Rs 50,484 crore. Small investors are particularly enamored of the post office monthly income plan, which offers returns of 8 per cent per annum, with a kicker of a 10 per cent bonus on maturity. However, despite the Rs 3 lakhs maximum investment limit for an individual in this plan, new investors are attracted. Besides, new maturities have also added to the increased funds flow in small savings.
Also, as bank deposits yields have fallen, more investors are shifting their deposits to post office time deposits. Company deposits, which used to be popular a few years ago, have all but vanished. The few that are still around don't seem worth a look. The National Savings Certificate too, which is similar to the PPF in its section 80L and 88 tax benefits, is also seeing a surge in collections. This is because investors want to lock in to an interest rate in a falling interest rate scenario.
