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Save Small Savings Schemes (POSB Schemes) | Save Small Savings Schemes, Save India Post | An Article By Bruhaspati Samal

Save Small Savings Schemes, Save India Post, Post Office, DOP (Department of Posts)

Five lakh postal employees including Gramin Dak Sewaks are organizing one day nationwide strike under the banner of PJCA (Postal Joint Council of Action) comprising National Federation of Postal Employees(NFPE) and Federation of National Postal organizations on 10th August, 2022 in protest against the proposed merger of Post Office Savings Bank (POSB) with India Post Payments Bank Limited (IPPB) leading to privatization of Department of Posts (DoP) through stage-wise corporatization beginning with National Small Savings Scheme (NSSS) operated through 1.57 lakh post offices as Post Office Small Savings Scheme (POSSS).

The exercise has since been started way back in 2014 when the Union Government constituted a Task Force on Leveraging the Post Office Network headed by Shri T.S.R. Subramaian Ex. Cabinet Secretary, Govt. of India. The Committee submitted its report in Novemeber-2014 recommending dividing Department of Posts (DoP) in to six units. i.e. 

(i) Banking and financial services (ii) Insurance (PLI/RPLI), (iii) Distribution of third-party products (Services on behalf of private parties on payment basis), (iv) Management of Govt. services (v) Parcel & Packets and (vi) communication delivery. 

The first five units were designated as Strategic Business Units and sixth unit was left to deliver mails at subsidized rates. Under DoP, a holding company “India Post (Financial and other Services) Corporation Limited” was recommended to be formed. The Corporation would consist of Board of Members and one Chairman from the Board members. All the five separate subsidiary companies would also have separate Boards. In the course of time, Govt. might disinvest its part of holding and new corporation would raise fund from share market and thereafter would also be listed in share market in future. It was stated in the report that five Subsidiary Companies would make profit and contribute to meet the loss of sixth unit. The Task Force Committee also recommended for amendment of Indian Post Office Act 1898 and to bring another Postal Act. “India Post (Financial and other services)" Corporation Act for reorganization of Deptt. of Posts (DoP) by creating new Corporate Structure.

Apprehending complete privatization of DoP through stage-wise corporatization of DoP, though there was a series of pan India agitations by the entirety of postal workers and employees, the Union Govt. did not pay any attention to the views and suggestions of the staff side and constituted IPPB in 650 branches and 3250 access points on 1st September, 2018 as the first PSU under DoP obtaining Certificate of Incorporation from the Registrar of Companies, Ministry of Corporate Affairs under the Companies Act 2013 with the objective to build the most accessible, affordable and trusted bank for the common man, to spearhead the financial inclusion agenda by removing the barriers for the unbanked and to reduce the opportunity cost for the under banked populace through assisted door step banking. Since then, as a policy of dual structure, IPPB has been contributing its technological process in helping modemize products of DoP in line with best banking practices. 

Similarly, DoP is extending the support of its massive and unmatched distribution network in creating a unified one-stop platform for delivering various Government-to- Citizen services that has the potential to radically change the overall banking experience for both the existing and new customers.

But the hidden agenda of the Govt. and apprehensions of the staff members for complete corporatization of DoP brought to light when the cabinet approved the | T Modernization Project 2.0 of DoP on 19th January, 2022 for an outlay of Rs.5785/- crore to be incurred for a period of eight years from 2022-23 to 2029-30 with a view to avoid the above dual structure and to keep only single IPPB structure to be used for banking, insurance and other financial services provided by India Post so far. The key decisions of the cabinet are that the core postal operations namely postal and point of sale (mails), accounting, field network, back office management and postal hardware will be the domain of DoP as DoP Track and rest operations, viz; banking and insurance, Rural hard were devices, IT infra fraud and risk management will be merged with IPPB as IPPB Track. 

Thus, the POSSS and Postal Life Insurance (PLI) which are in operation since 1882 and 1884 respectively and other financial products and services introduced by DoP subsequently since promulgation of Indian Post Office Act, 1854 and have been offering best services to the members of public for last 168 years will now lose their independent existences.

The POSB Account offers interest @ 4% per annum for deposits without any upper limit and free of service charges and there is also no limitation either on amount or on number of transactions relating to deposit and withdrawal. While 1 / 2/3 Year TD Account carries interest @ 5.5 per annum, 5 year TD carries 6.7% being compounded quarterly including 5 Year RD @ 5.8% per annum. Similarly, SCSS, MIS, NSC, PPF, KVP and SSA carry rate of interest @ 7.4%, 6.6%, 6.8%, 7.1%, 6.9% and 7.6% per annum respectively. There is no upper limit of investment in case of SB, TD and RD Account, investment in SCSS, PPF and 5 Year TD qualifies for the benefit of Section 80C of the Income Tax Act, 1961. Easy and acceptable methods of opening of account, subsequent deposit, withdrawal, closure and transfer attracted the members of public towards POSB Schemes. 

As on 31.03.2021, the total number of Accounts under NSSS is 290387767 with outstanding balance of Rs. 969136.17 crore. With a variety of products as above, DoP operates POSSS on behalf of Ministry of Finance, Government of India and earns nearly 64% of its income from National Small Savings Scheme (NSSS).

Contradictorily, IPPB Account offers interest @ Rs.2.00% and @ 2.25% per annum on balance up to Rs. 1 lakh and for incremental balances above Rs. 1 lakh and up to Rs. 2 lakh respectively. In addition, while there was no charges initially for Door Step Banking (DSB), now a sum of Rs. 20/- plus GST is being charged from the customers. Not only DSB, but several other facilities like cash deposits, withdrawals and mini statements beyond three free transactions a month, digital SB Account closure, fund transfer, standing instruction, POSB sweep-in and sweep- out, payment for DoP products (SSA, PPF, RD), mobile postpaid, bills payment, AePS transactions, annual maintenance and re-issuance of virtual debit card etc. are also chargeable by IPPB from Rs.5/ to Rs.50/- plus GST for which customers are not showing that much of interest towards IPPB and the very purpose of its execution in spite of protest by the postal workers has been defeated with a minus balance of Rs. 821,43,93,936/- in the Annual Profit Loss Account of IPPB for the year ending 31st March, 2021. 

While IPPB is functioning in the rent free building provided by DoP including water and electricity, maximum DoP employees are working in IPPB on deputation and all the services introduced by IPPB are practically performed by DoP original employees, it has unnecessarily thrown a burden of more than Rs.821 crore on DoP in just 30 months going against its exquisite slogan “Aapka Bank Aapke Dwar”. Further, the IPPB is also creating confusion amongst the esteemed customers of PLI when it campaigns for Bajaj Allianz Life POS Goal Suraksha on behalf of DoP which has introduced PLI since 1st February, 1884.

There should not be a conflict of interest with PLI being the oldest insurance in the country with ‘Low Premium, High Bonus’ and having access to each individual citizen of India through Rural Postal Life Insurance available in all the 1.57 lakh post offices.

Out of 1.57 lakh post offices, 1.30 lakhs are in rural areas, the investors of NSSS are mainly rural poor people belonging to economically weaker section of the society. Their hard earned money is quite safe and secured under NSSS providing good amount of returns. It may not be a wise decision for forceful merger of their deposits with a loss making banking organization in the name of IPPB Ltd which is just a payment bank and not full-fledged. In case it goes bankrupt, the depositor is only entitled for Rs. 5 lakh only as per the threshold limit fixed by RBI's Deposit

Insurance and Credit Guarantee Corporation. But that apprehension is not at all there under POSSS. The proposed arbitrary merger of POSB with IPPB will only corporatize this largest postal network in the world which earns 64% of its total income from POSSS and put the members of public to unnecessary difficulties depriving them the huge benefits given by NSSS. To bring an awareness among the citizens of India regarding the future negative consequences of the proposed merger of POSB with IPPB and to protect the interest of 30 crores investors and their 10 lakh crore investments under NSSS on one hand and to save India Post and postal services mounting pressure on the Govt. on the other, five lakh postal employees including Gramin Dak Sewaks are organizing one day nationwide strike on 10th August, 2022. 

When the possibility of the existence of a civilized state cannot be conceived without the cooperation of this vast organization of effective communication which has legitimately conquered so important place in Indian social, political, religious, cultural and economic atmosphere transmitting the words and thoughts of the nation, it should be treated as an exception to the proposed corporatization move of the Central Govt. The proposal of proposed merger of POSB with IPPB needs to be stopped forthwith to save India Post, the significance of which can be better understood by visualizing its absence due to corporatization.

Bruhaspati Samal

Ex-All India Org. General Secretary (P-III)

National Federation of Postal Employees

eMail: bsamalbbsr @, Mobile:9437022669

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