Is this is a new beginning or beginning of an end for PPF & NSC?

November 15, 2011   ·   0 Comments

www.stockssavvy.comIn order to attract more investors, Government has revised Interest rates on PPF, NSC & has scrapped agent’s commission. Small investors will directly benefit from this move. SEBI has burnt their hands by trying to pass the max. Benefits to investors & cutting the agents commission couple of years back. The question here arises. Is this is a new beginning or beginning of an end?

  • Commission for agents on PPF and Senior Citizens Savings Schemes are scrapped. For any other instruments, agents commission will now be 0.5% against 1% earlier . According to the Gopinath Committee, the agents were paid around Rs 2,400 crore commissions in 2010-11.
  • The Maturity tenure for National Saving Certificate (NSC) has been reduced to 5 years (earlier it was 6 years) and interest rates increased to 8.4% from 8%
  • A new National Savings Certificate (NSC) would be launched with a 10-year maturity with an annual interest rate of 8.7 per cent.
  • Post office savings account interest is increased from 3.5% to 4 per cent.
  • Interest on loans obtained from PPF will be increased to 2% p.a. from existing 1% p.a
  • Kisan Vikas Patra has been discontinued from now onwards . The committee had said that the KVP was a bearer-like certificate with a regulated premature closure facility and was open to abuse by tax dodgers. They can be bought or sold without going to the post offices.
  • Maturity period for Post Office Monthly Savings Scheme (POMIS) has been reduced to 5 yrs. and interest rate has been increased from 8% to 8.2%. Also the 5% bonus on maturity has been scrapped.
  • The interest rates of various tenures fixed deposits in Post Office is increased , for example for 1 yrs. Fixed deposit , the new interest rates is 7.7% against 6.25% earlier aligned with G-Sec rates

www.stockssavvy.comThis move is useful for the people who can take an informed decision by putting their investment in PPF’s & NSC’s who were earlier keeping away due to low interest rates but how about the investors who goes by agents recommendation’s (mostly friends, relatives) to invest. Government has hit their leg in axe by axing agent’s commission which is the main source of getting new investors. With this move, insurance companies will try to match the interest in their endowment plans & money back policies & that will be the only benefit which investors should get as insurance companies will still keeping on getting new investors & will prosper due to high commission rates offered to agents.

Tell us how do you feel about the move by government?

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Rajesh Singla

Rajesh is the founder & CEO of Stockssavvy, Stocks analyst,financial advisor by choice,software engineer by fate,biker,gamer,cricket lover n enthusiastic person. He believes in doing things not just to get by but to get Ahead...

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