Panel to weigh Freeing of Small Savings Interest Rate

The Centre has set up a committee to consider providing debt to states at 9 per cent interest rate from proceeds of National Small Savings Fund (NSSF). Deputy governor of the Reserve Bank of India, Shyamala Gopinath, will head the panel that has been set up in sync with recommendations of Thirteenth Finance Commission (TFC).

TFC had recommended providing debt relief to states. It has advised the government to revise interest charged on states loans to 9 per cent against prevailing 9.5-10.5 per cent.

Revision in interest rate was mooted for all loans contracted till 2006-07 and outstanding till end of the previous financial year.

The commission had also recommended reforms in design and operation of NSSF in order to bring about transparency and market-linked rates.

Seven-member Shyamala Gopinath panel will review existing parameters for all small saving schemes towards bringing about flexibility. It will also review existing terms of loans extended from the NSSF to states.

The committee will also recommend possible onward investment opportunities for funds mobilised through small savings and the repayment terms for states taking into consideration cost of operating NSSF.

“While making its recommendations, the committee is expected to consider importance of small savings within overall savings in the economy especially its contribution in promoting savings amongst small investors and need for making NSSF a viable fund,” said a press release.

Financial Chronicle, New Delhi, 14-07-10.