Lower Small Savings Interest Rates: Economic Times
Interest
rates on small savings
This refers to the editorial “Lower Small Savings Interest Rates” (Economic Times, November 4).
Post-liberalisation, resources mobilisation is also about competition. Banks,
corporates and government are dependent on domestic savings for funding their
business/projects. Once RBI has relented and brought down base rates, reality
stares at the users of public funds. Reality is that savers will make choices
and will divert savings to investment avenues which they feel are safe, liquid
and will fetch a reasonable return.
True, banks have lowered
deposit rates after rate cut by RBI. It is also true that banks have been
forced to make some cosmetic changes in lending rates (which, some of them have
done reluctantly and only time will tell the extent of benefit given to the
borrowers). There is nothing wrong in corporates eying small savers as a potential
investor-group. But, equity investment is yet to claim the kind of trust among
retail investors.
First, LIC, EPFO and NPS
should prove to the investing public that they are able to generate returns
comparable with safer investment avenues like small savings and PPF by
investing in equity. Government also should demonstrate that their market
borrowings can sustain without the captive SLR funds from banks and ‘directed’
investments by organisations which it controls.
M
G Warrier, Mumbai
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