Ministry of Finance, vide its Order No. 5-2/2010-NSII dated 8th July, 2010 constituted the Committee on Comprehensive Review of National Small Savings Fund chaired by Smt. Shyamala Gopinath, Deputy Governor, Reserve Bank of India.
The above said Committee on Comprehensive Review of National Small Savings Fund submitted its report titled “Report of the Committee on Comprehensive Review of National Small Savings Fund – June 2011” to the Hon’ble Finance Minister on June 7, 2011.
The Committee has observed (Page 19 - Historical Background – 2.1.1) that the schemes are operated through the countrywide network of about 1.5 lakh post offices, more than 8,000 branches of the public sector banks and select private sector banks and more than 5 lakh small savings agents.
The Committee has also observed (Page 73 - 7.3. Commission payable to Small Savings Agents) that State Governments have, in the past, noted the employment generated by small savings schemes.
The Committees has recommended (Summary of recommendations - Page 11) as follows :-
Commission Payable by the Centre to Small Savings Agents
At present, the Central Government pays commission at the rate of 4 per cent to small savings agents under Mahila Pradhan Kshetriya Bachat Yojana (MPKBY) on the P.O. recurring deposits scheme, which makes it essentially an agent driven scheme. The Committee is of the view that financial literacy programmes should promote postal savings instruments and the commission could be reduced by a minimum of 100 basis points each year to 1 per cent on PORD scheme within three years. Further, no commission may be payable on PPF and SCSS (as against commission of 1 and 0.5 per cent, respectively paid currently). A commission of 0.5% may be payable for all other schemes (viz., time deposits, MIS and NSC (as against 1 per cent paid currently)).
The Committee has put up (Page 75 - 7.3. Commission payable to Small Savings Agents) as follows :
The Committee therefore recommends that under PPF, the commission should be abolished. Under PPF, 90% of the transactions are happening through banks and for banks commission is not payable for any other scheme of theirs. The Committee feels that 4% commission under MPKBY is very high and is affecting the viability of NSSF. The Committee recognises that the RD scheme requires considerable effort on part of agents in mobilizing monthly deposits. However, 4% commission is distortionary and expensive. The committee recommends that this should be brought down to 1% in a phased manner in a period of three years with a 1% reduction every year. Under SAS, while the commission for senior citizen saving scheme is 0.5%, it is 1% on other scheme. The Committee recommends that while commission should be abolished on Senior Citizen Saving Scheme, on other schemes, it should be brought down to 0.5%.
