The Government has set up a committee for comprehensive review of the National Small Savings Fund (NSSF) structure, interest rates, tenor and other administrative matters. This committee would be headed by Ms Shyamala Gopinath, Deputy Governor of the Reserve Bank of India.
The terms of reference of the committee include review of the existing parameters for the small saving schemes in operation and recommend mechanisms to make them more flexible and market linked. It would also review the existing terms of loans extended from the NSSF to the Centre and States and recommend the changes required in the arrangement of lending the net collection of small savings to Centre and States.
Investment avenues
Investment avenues
The committee has also been asked to review other possible investment opportunities for the net collections from small savings and also the repayment proceeds of NSSF loans extended to States and Centre; review of the administrative arrangement including the cost of operation; and review of the incentives offered on the small savings investments by the States.
Panel members
Panel members
The other members of the Committee include the Joint Secretary (Budget), Ministry of Finance; the Economic Adviser, Ministry of Finance, Department of Economic Affairs; the Principal Secretary (Finance), Government of Maharashtra; the Principal Secretary (Finance), Government of West Bengal; Dr Rajiv Kumar, Director and Chief Executive, Indian Council for Research on International Economic Relations (ICRIER); and Mr J.M. Garg, Chairman and Managing Director, Corporation Bank.
The Thirteenth Finance Commission had in its report recommended that all aspects of the design and administration of the NSSF be examined with the aim of bringing transparency, market-linked rates and other much needed reforms to the scheme.
The report had also suggested that the interest rate on loans contracted by the States till 2006-07 and outstanding at the end of 2009-10 be reset at a common interest rate of 9 per cent in place of the existing rates of 10.5 per cent or 9.5 per cent.
“While making its recommendations, the Committee is expected to consider the importance of small savings within the overall savings in the economy especially its contribution in promoting savings amongst small investors and need of NSSF,” an official release said.
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