Financial Daily from THE HINDU group of publications
Wednesday, Aug 04, 2004
Money & Banking - Interest Rates
Post office deposit scheme rates may continue: Panel
Chennai , Aug 3
POST office savings bank accounts, which currently pay depositors an interest rate of 3.5 per cent per annum, and Post office recurring deposits which pay 7.5 per cent, should be allowed to continue, according to the (pre-Budget) May 2004 report of the Rakesh Mohan Committee.
Post Office Time Deposit accounts and Monthly Income Schemes, which pay 6.25 to 7.5 per cent and 8 per cent respectively, too, should be allowed to continue; as should the Public Provident Fund, which now pays only 8 per cent per annum.
The Committee has also recommended that tax incentives on PPF schemes should be allowed to continue, "pending the development of a Social Security System".
According to the Committee's Report, the Dada-Dadi Savings Scheme will be open to retiring Central/State Government employees, and to retired Judges of the Supreme Court and the High Courts. Retiring employees falling in these categories, the Committee says, should be allowed to invest in the Dada-Dadi scheme within three months of receipt of retirement benefits.
Retired judges of the Supreme and High Courts who have already received their retirement benefits, before the introduction of this scheme, ought to be allowed to invest in the scheme within three months "from the time the scheme is notified".
Retirement benefits which are eligible for investment in the scheme are: (i) balance outstanding in any of the Government Provident Funds; (ii) retirement/superannuation gratuity; (iii) commuted value of pension; (iv) cash equivalent of leave `arrears'; (v) savings element of government insurance schemes payable to employees on retirement; and (vi) arrears of retirement benefits consequent to the implementation of the recommendations of the 5th Pay Commission.
Any employee desiring to invest his/her retirement benefits under the scheme will be required to produce a certificate from his/her employers indicating the retirement benefits.
However, where the amount invested does not exceed Rs 5 lakh, an affidavit on stamped paper can be accepted instead.
All other terms and conditions of the scheme shall remain the same as the Dada-Dadi savings scheme announced by the Union Government.
In this connection, it is worth noting that according to Table 3 of the Committee's Report, the interest payable on the `Deposit Scheme for Retiring Employees' is stated to be 7 per cent per annum, 3 per cent below the rate payable in 1993.
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