- Bruhaspati Samal -
Financial frauds invite devastating consequences both for individuals and the economy of the nation as a whole. While digital payments have made life convenient and easy In India, they have also made us prone to all kinds of financial frauds. A survey conducted in October 2021 highlighted alarming statistics on financial frauds in India. Out of the respondents, 42% reported experiencing financial fraud within the past 3 years, with a concerning 74% unable to recover their lost funds. Shockingly, 29% admitted to sharing their ATM or debit card pin details with close family members, while 4% disclosed such information to domestic and office staff. Additionally, 33% admitted to storing sensitive financial data, including bank account details, card information, and passwords, on their email or computer, while 11% stored them in their mobile phone contact list. According to the RBI, frauds amounting to Rs. 60,414 crore were reported in 2021-22 and that these frauds have cost India a staggering Rs.100 crore daily over the past 7 years.
Often due to a combination of deceptive tactics and vulnerabilities in the investment process including misappropriation, criminal breach of trust, forged instrument encashment, manipulation of accounts, fictitious accounts, unauthorized credit facilities, negligence, cash shortages, cheating, forgery, irregularities in foreign exchange transactions etc. financial frauds into various categories are severally witnessed to be mushrooming daily in newspapers, electronic channels and in social medias. As experienced, the fraudsters often lure investors with promises of high returns with little to no risk. They may claim to have a "secret formula" or inside information that guarantees success. Greed and the desire for quick profits can blind investors to the red flags. In a Ponzi scheme, early investors are paid returns from the contributions of new investors rather than from profits generated by the investment. This can create the illusion of a successful investment and attract more investors, but eventually, the scheme collapses when there are no more new investors to pay returns. At times, the fraudsters may misrepresent the nature of the investment, its risks, or the credentials of the individuals involved. They might falsify documents, provide fake testimonials, or use other deceptive tactics to give the appearance of legitimacy. Investments that are not properly registered with regulatory authorities are often a red flag for fraud. Fraudsters may offer unregistered securities to avoid scrutiny and oversight, but investors who fall for these schemes may find themselves with little recourse if things go wrong. It is also a common nature with the fraudsters to use high-pressure sales tactics for pushing investors into making quick decisions without conducting proper due diligence. They might create a sense of urgency by claiming that the opportunity is limited or that others are already investing. Some fraudsters target investors with complex investment products that are difficult to understand. This complexity can make it easier for fraudsters to obscure risks or misrepresent the investment's true nature. In some cases, investors are cheated because of inadequate regulation and oversight in the financial industry. The fraudsters exploit loopholes or operate in jurisdictions with lax regulatory enforcement, making it easier to perpetrate their schemes. Ultimately, the investors are cheated by fraudsters because they trust the wrong people or fail to conduct thorough due diligence before investing.
But while investments in the National Small Savings Scheme, popularly known as the Post Office Small Savings Scheme (POSSS) can easily forestall the above deceptive tactics of the fraudsters, it is quite surprising that many people don’t consider it proper to think for this people’s bank which is said to be the Asia’s largest small savings bank. To strongly counter the above tactics of the fraudsters on one hand and to keep the invested money safe and secured with a guaranteed return on the other, investments in different POSS Schemes should be preferably considered by the investors due to the following valid reasons.
1. Accessibility: India Post has occupied the nervous system since 1854 which transmits the words and thoughts of the nation and since 1882 the Post Office Small Savings Bank offers widespread accessibility, with branches located in both urban and rural areas, ensuring convenient access to financial services for individuals across diverse locations. The POSB being the biggest and the oldest Savings Bank Organization in the country operates small savings schemes through a network of 1.59 lakh Post Offices with reach to the remotest corner of the nation.
2. Trustworthiness: Long before the times of email and mobile phones, Post Offices have a long-standing reputation for reliability and trustworthiness, instilling confidence in depositors regarding the safety and security of their savings with wide spread impact on the socio-economic life of the nation through efficient and prompt service.
3. Government Backing: The Post Office being a government-regulated entity provides a reliable option for individuals who prioritize security of their hard-earned money. The POSB is being operated by the Department of Posts on behalf of the Ministry of Finance, Govt. of providing an additional layer of assurance for depositors regarding the safety of their funds.
4. Simple Procedures: The procedures for opening and operating accounts with Post Office Small Savings Bank are straightforward and hassle-free, making it an attractive option for individuals seeking simplicity in their banking transactions. Easy and acceptable methods in opening of account, subsequent deposits, withdrawals, closure and transfer attract the members of public towards POSB Schemes.
5. Range of Savings Schemes: Post Office Small Savings Bank offers a diverse range of savings schemes, including fixed deposits, recurring deposits, and various savings accounts, catering to the diverse needs and preferences of depositors. It offers POSB Accounts since 1882, Public Provident Fund (PPF) Account since 1968, 5 Year Recurring Deposit (RD) Account including 1 / 2 / 3 / 5 Year Time Deposit (TD) Account since 1970, Monthly Income Scheme (MIS) Account since 1987, Kisan Vikash Patra (KVP) since 1988, National Savings Certificates (NCS) since 1989, (VIII Issue), Senior Citizen Savings Scheme (SCSS) Account since 2004, Sukanya Samridhi Account (SSA) since 2015 and Mahila Samman Savings Certificate (MSSC) since 2023.
6. Competitive Interest Rates: Post Office Small Savings Bank offers competitive interest rates on its savings schemes, providing depositors with the opportunity to earn attractive returns on their savings over time. The interest rates applicable for the first quarter of the Financial Year 2024-25 on various National (Small) Savings Schemes are as under.
7. Tax Benefits: While deposits under PPF, 5 Year TD, NSC (VIII Issue), SCSS Account and SSA Account qualify for deduction under section 80C of Income Tax Act, 1861 making them tax-efficient investment options, interest earned under SSA Account tax free under Income Tax Act.
8. Flexibility: Post Office Small Savings Bank provides flexibility in terms of deposit amounts, withdrawal options, and tenure, allowing depositors to tailor their savings strategies according to their financial goals and requirements. In general, POSSs offer several other facilities to the customers too. Through e-banking, account holder can deposit online in SB / RD / PPF / SSA schemes and open and close RD / TD account online. The depositor can also credit amount in SB, PPF and SSA accounts from their Account in any other bank or PO Savings Account to other Bank Account using NEFT / RTGS services of POSB. IFSC code of POSB is IPOS0000DOP. The depositors can also avail auto credit facility to get TD / MIS / SCSS interest directly into their Bank Account or PO Savings Account or auto credit RD deposit from PO Savings Account. They can get maturity value of Accounts / Certificates in their Bank Account by submitting copy of first page of passbook or cancelled cheque along-with account closure form. After receipt of passbook, depositor can check balance of his / her account using ‘Interactive Voice Response (IVR)’ facility by calling through the registered mobile number at India Post toll-free number 18002666868. Blocking of ATM card facility can also be availed through toll free number 18002666868.
9. Financial Inclusion: Post Office Small Savings Bank plays a crucial role in promoting financial inclusion by offering banking services to individuals who may have limited access to traditional banking institutions, thereby empowering them to participate in the formal financial system.
10. No market volatility: Most importantly, unlike investments in stocks or mutual funds, Post Office schemes are not subject to market volatility, offering a stable and secure investment option, particularly during uncertain economic times.
Thus, investing in Post Office small savings schemes offers several compelling advantages. Overall, saving money in a post office provides a secure, stable and accessible way to grow savings without exposure to high risks, making it an attractive option for risk-adverse individuals and those seeking consistent returns with government backing.
(The author is a retired Postmaster and presently working as General Secretary, Confederation of Central Govt. Employees and Workers, Odisha State Coordination Committee, Bhubaneswar. eMail: bsamalbbsr@gmail.com, Mobile: 9437022669)
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