CHAPTER NO: 1

INTRODUCTION

CHAPTER NO: 1

INTRODUCTION

POSTAL SERVICES IN INDIA

India possesses the largest postal network in the world with 155,000 post offices

spread all over the country as on March 31, 2001, of which 89 per cent are in the rural

sector.

Post offices in India play a vital role in the rural areas. They connect these rural areas

with the rest of the country and also provide banking facilities in the absence of banks

in the rural areas.

The modern postal service in India is more than 150 years old. In 1854, the Post

Office in the Province of Sindh, (then in British India), made postal history, when

India became the first country to issue postage stamps.

In October 1854, all the post offices of Indian subcontinent came under centralized

control. In the same year Railway Mail Service was established and India had a

network of 701 post offices across the continent. In 1911, India achieved another

"first" when a biplane from Allahabad to Naini flew with 6500 pieces of mail. The

flight was the first official Air Mail in the world.

After independence, the Indian government broadened the vision of the postal system

to reach the entire population of the country.

Today Indian postal system has a reach that ranges from arid deserts of Rajasthan and

Kutch to the icy heights of Laddakh. India has the highest post office in the world in

Sikkim at a height of 15,500 feet (postal code - 172114).

Indian postal service provide many facilities like - general or registered mail, parcel

post, speed post, express post, e post and special courier service known as EMS-speed

post.

They also offer a number of post office savings schemes like National Savings

Certificate, Kisan Vikas Patra, Recurring Deposits and Term Deposits.

Kisan Vikas Patra

Kisan Vikas Patra (KVP) is a saving instrument that provides interest income similar

to bonds. Amount invested in Kisan Vikas Patra doubles on maturity after 8 years & 7

months.

Monthly Income Account

Post Office Monthly Income Account is meant for those investors who want to invest

a lump sum and earn interest on monthly basis for their livelihood.

National Savings Certificate

National Savings Certificate, popularly known as NSC, is a time-tested tax saving

instrument that combines adequate returns with high safety.

Public Provident Fund

Public Provident Fund, popularly known as PPF, is a savings cum tax saving

instrument. It also serves as a retirement planning tool for many of those who do not

have any structured pension plan covering them.

Recurring Deposit Account

Recurring deposit account is a systematic way of saving money. The scheme is meant

for those investors who want to deposit a fixed amount regularly on monthly

Post Office Saving Account

Post office saving account is similar to a savings account in a bank. It is a safe

instrument to park those funds, which you might need to liquidate fully or partially at

very short notice.

Time Deposit Account

Post office time deposit account is just like the bank fixed deposit account. These time

deposits are meant for those investors who want to deposit a lump sum for a fixed

period

CHAPTER NO: 2

CONCEPTUAL DATA

CHAPTER NO: 2

CONCEPTUAL DATA

Post office small saving schemes have been very popular among our older generation,

despite its not so attractive interest rates. Post office could not also embrace technology. You

can’t invest in post office saving scheme online. Post office has not shifted to core

banking. Still, many of us prefer post office due to the security and its reach. As government

runs post offices, your money remains with the government. This gives you the peace of

mind. Also you can find post offices at the remotest place. There are 1.54 lakh branches of

post office in India. Even the interest rates of post office are not the highest but of course at

competitive rates.

Every year in the March Government of India fixes interest rate of all the small saving

schemes. 

Post Office Saving Schemes which give Tax Benefit

Government of India has given tax benefit to the many post office small saving schemes.

Public Provident Fund, National Saving Certificate, Senior citizen saving scheme, 5 yr Time

Deposit are such scheme. Among these NSC is most popular.

National Saving Certificate (NSC)

National Saving Certificate Scheme is a similar to fixed deposit. You get a

printed certificate (like bonds) of different denominations.

NATIONAL SAVING CERTIFICATE

Interest Rate Min Investment Max Investment Period

8.5%, 8.8% Rs 100 No Limit 5, 10 Yrs

Investment

Tax Benefit Yes Return

Maturity

NSC is only for 5 and 10 years.

The interest rate is fixed for a total duration of maturity.

The interest rate is compounded half yearly, but accrued annually.

National Saving Certificates are available in the denominations of Rs 100, Rs 500,

Rs 1,000, Rs 5,000 and Rs 10,000

You can take a loan against the NSC from any bank.

Online investment facility is  not available.

Taxation of NSC

This Scheme gives you a tax benefit under 80C. You can claim tax rebate up to

investment of one lakh.

Interest earning of every year can be also claimed for tax rebate under 80C.

Total interest at the end of maturity period would be taxable.

TDS is not applicable you have to add the return in your total income.

Public Provident Fund (PPF)

Public Provident Fund has been one of the most popular saving schemes of post office. But

today it is losing charm because it does not give online deposit facility.

PUBLIC PROVIDENT FUND

Interest Rate Min Investment Max Investment Period

8.7% Rs 500 Rs 1,00,000/yr 15 Yrs

Investment

Tax Benefit Yes Return

Maturity

PPF is a very popular scheme and one of the best tax saving investment.

It is for the duration of 15 years. You can invest at your wish during this period.

You have to invest minimum once in a year.

You can invest maximum 12 times in a year.

Loan and premature withdrawal facility is available with conditions.

Post offices don’t give online investment facility or electronic fund transfer. If

you want online facility then you can open  a PPF account   in SBI or any other

government banks. Some Private Banks  also give   online PPF facility.

Taxation of PPF

You can get a tax rebate on the investment of PPF.

Maturity amount is also tax-free.

Every investment in the PPF scheme is entitled of tax rebate under 80C.

Senior Citizen Saving Scheme

Senior Citizen Saving scheme is designed to the need of retired person. Normally people

gets lump sum amount of employee provident fund. Such employee can put their money in

SCSS and can get regular income in every 3 months.

SENIOR CITIZEN SAVING SCHEME

Interest Rate Min Investment Max Investment Period

9.2% Rs 1000 Rs 15,00,000 5 Yrs

Investment

Tax Benefit Yes Return

Maturity

As its name denotes this scheme only for senior citizens who has completed 60 years

of age.

You can invest a lump sum in this scheme.

You can open joint account with your spouse as well.

You can have more than one account.

Investment should be in the multiple of 1000.

The duration of this account is 5 years. This can be extended further 3 years.

Interest is calculated quarterly. The government pays interest after every quarter.

Payment dates are 31St March, 30th June, 30th September, and 31St December

If you have saving account in the same post office, then interest is credited directly

into the account. Else you can get post-dated cheques.

You can close your account after one year. But the government will deduct some

amount according to below formula.

After one year– up to 2 years – 1.5% of the Balance Deposit Amount.

After 2 years – 1% of the Balance Deposit Amount.

The maximum investment limit for this scheme is 15 lakh

Banks also gives the facility of the senior citizen saving scheme.

Taxation of Senior Citizen Saving Scheme

You can claim tax rebate under 80C.

Interest earning  is taxable. TDS is deducted if interest is more than 10,000.

Post Office Time Deposit Account

This is similar to fixed deposit in bank. Time deposit of 5 years is eligible for tax

rebates under 80C.

Interest would be taxable.

Details of time deposit are given below

Post Office Small Saving Scheme for Senior Citizen

Except Senior Citizen Saving Scheme (SCSS) there are other post office small saving

schemes which are beneficial for senior citizens.

Post Office Monthly Income Account Scheme

Monthly Income Scheme gives you regular monthly income. To avail maximum benefit of

this scheme you should open joint account with your spouse.

MONTHLY INCOME ACCOUNT SCHEME

Interest Rate Min Investment Max Investment Period

8.4% Rs 1,500

Rs 4,50,000 (Single)

Rs 9,00,000 (Joint) 5 Yrs

This scheme gives you a regular monthly income. It is similar to an annuity plan.

Minimum investment in MIS is Rs 1500.

The maximum you can invest 4.5 lakh in single account and 9 lakhs in a joint account.

Your investment should be in the multiple of 1500.

The account can be transferred from one post office to another.

You can open any number of accounts.

If you have saving account in the same post office, then interest would deposited in

saving account, else government pays monthly interest by post-dated cheque or ECS.

You can withdraw your money before the 5 year period, but the post office will

charge a penalty. If you withdraw before 3 years, then 2% of the amount will be

deducted. After 3 years deduction will be 1%.

Fixed (FD) and Recurring Deposit (RD) in the Post Office

You can enjoy the benefit of fixed and recurring deposit benefit in the post office as well.

Fixed deposit is called Time Deposit in the post office.

Time Deposits

FIXED DEPOSIT IN POST OFFICE

Interest Rate Min Investment Max Investment Period

8.4% Rs 200 No Limit 1, 2, 3, 4 Yrs

8.5% Rs 200No Limit

5 Yrs

Post office gives many options of a time deposit. You can open time deposit for 1, 2,

3, 4, and 5 years.

It gives different interest rates for every duration. However, recently government is

giving similar interest rate for 1, 2, 3, and 4 years.

You can open any number of accounts.

You can transfer an account from one post office to another.

2,3 & 5 your account can be closed after 1 year at a discount.

The account can also be closed after six months. In this case you will get an interest

rate of saving account (4%).

Recurring Deposits

Only Recurring Deposits in the post office give you partial withdrawal facility.

RECURRING DEPOSIT IN POST OFFICE

Interest Rate Min Investment Max Investment Period

8.4% Rs 10/Month No Limit 5 Yrs

You can open recurring deposit in the post office for as little 10 rupees per month.

5 years recurring deposit account can be extended for further 5 years.

If you have opened an account before 15 days of the month, then your subsequent

deposit should be also before the 15th of the month. Similarly, if opened your account

after 15th but before the last day of the month, then your subsequent deposits should

be in this period.

One withdrawal up to 50% of the balance allowed after one year.

DISTINGUISH BETWEEN POST OFFICE DEPOSIT AND BANK DEPOSIT

Is post office term deposit is better than bank fixed deposit? Below are the major differences

among these two.

1. Tenure of deposit

Term deposit offered by Post office is available for 1, 2, 3 and 5 years period

Bank fixed deposits are available from 15 days period to 10 years period.

2. Interest rates

Post office deposit rates are between 8.2% to 8.5% p.a.

Bank fixed deposit interest rate varies between 7.5% to 9.25% p.a.

3. TDS

For Post office term deposit, there is no TDS deducted by Post office.

For Bank Fixed deposits, TDS would be deducted on interest.

4. Opening the deposit account

Post office term deposit can be opened only by adult individuals either single or

jointly. Others cannot open the deposit account.

Bank fixed deposits can be opened by any one

5. Safety

Post offices run by Govt. of India, hence term deposits are 100% safe.

Bank fixed deposits does not provide any safety. However investment up to 1 lac in

bank fixed deposits are covered under insurance.

CHAPTER NO: 3COLLECTION OF DATA

AND ANALYSIS

CHAPTER NO: 3

DATA AND ITS ANALYSIS

1. While making an investment, what is your general objective or goal?

A) To be able to generate income B) To ensure growth in my income

C) Appreciation of capital

Objective or Goal Number of Respondents

To be able to generate income 70%

To ensure growth in my income 20%

Appreciation of capital 10%

70%

20%

10%

Objective or Goal

To be able to generate incomeTo ensure growth in my incomeAppreciation of capital

2. According to you, which tool of investment do you generally use?

A) Bank deposits B) Post office plans & schemes

C) Gold D) Other____________

Investment Number of respondents

Bank deposits 50%

Post office plans & schemes 30%

Gold 10%

Other 10%

Bank deposits Post office plans & schemes

Gold Other

50% 30% 10% 10%

Investment

Number of respondents

3. Do you have account in bank?

A) Yes B) No

Account in Bank Number of respondents

Yes 100%

No 0%

Yes No0%

20%

40%

60%

80%

100%

120%

100%

0%

ACCOUNT IN BANK

Number of respondents

4. Which type of account do you have with bank?

A) Saving B) Recurring

C) Current D) Fixed

Type of account Number of respondents

Saving 70%

Recurring 10%

Current 0%

Fixed 20%

Saving; 70%

Recurring; 10%

Fixed; 20%

type of account

Saving Recurring Current Fixed

5. Do you have taken any policy from post office?

A) Yes B) No

Policy Number of respondents

Yes 80%

No 20%

Yes No0%

10%

20%

30%

40%

50%

60%

70%

80%

80%

20%

Number of respondents

POLICY

85%

6. Which type of account do you have in post office?

A) Saving bank B) Fixed deposit

C) Recurring deposit

Type of account Number of respondents

Saving bank 40%

Fixed deposit 30%

Recurring deposit 10%

50%

38%

13%

Number of respondents

Saving bankFixed depositRecurring deposit

7. For what period you have taken the policy?

A) Less than 1 year or 1year B) Less than 3 year or 3 years

C) Less than 5 year or 5 year D) Less than 10 year or 10 years

Period Number of respondents

Less than 1 year or 1year 10%

Less than 3 year or 3 years 10%

Less than 5 year or 5 year 40%

Less than 10 year or 10 years 20%

10%

10%

40%

20%

Less than 1 year or 1year Less than 3 year or 3 yearsLess than 5 year or 5 year Less than 10 year or 10 years

8. From where do you get the information about postal saving scheme?

A) Newspaper B) Agent

C) Internet D) Other

Information Number of respondents

Newspaper 20%

Agent 10%

Internet 30%

Other 20%

Newspaper Agent Internet Other0%

5%

10%

15%

20%

25%

30%

20%

10%

30%

20%

Number of respondents

.

9. What is your main concern while taking postal saving scheme?

A) Tax benefit B) Investment

C) Security D) Other

Main Concern Number of respondents

Tax benefit 0%

 Investment 50%

Security 10%

Other 20%

Tax benefit  Investment Security Other0%

10%

20%

30%

40%

50%

60%

0%

50%

10%

20%

Number of respondents

Number of respondents

10. Have you suffered from any loss from postal saving scheme or bank?

A) Banks B) Postal offices

YES NO YES NO

Business handled Number of respondents

BANKS(YES) 2%

BANKS(NO) 80%

POSTAL OFFICES(YES) 2%

POSTAL OFFICES(NO) 80%

BANKS(YES)

BANKS(NO)

POSTAL OFFIC

ES(YES)

POSTAL OFFIC

ES(NO)

0%

10%

20%

30%

40%

50%

60%

70%

80%

2%

80%

2%

80%

Number of respondents

11. Which services does satisfy you the most?

A) Bank B) Post offices

Satisfy Number of respondents

 Bank 50%

Post offices 50%

 Bank Post offices 0%

10%

20%

30%

40%

50%

60%

50% 50%

Number of respondents

Number of respondents

12. According to you which services provider give greater interest rate?

A) Bank B) Post office

Services provider Number of respondents

Bank 60%

Post office 40%

60%

40%

Number of respondents

Bank Post office

DATA COLLECTION

Sample of study:-

The sample for this study consisted of ten respondents. The selected respondents in the age

group of 20-60 years belonged to varied employment, gender and income groups. Convenient

sampling technique was applied in selecting respondents as sample.

Data source:-

The study is based on primary and secondary data.

1) Primary data:-

A self-designed questionnaire consists of first and second part, which deals with the

respondent’s perception, was used for the purpose of primary data collection.

2) Secondary data:-

Secondary data have been collected from the journals, different books and websites.

3) Data analysis:-

The data collected from various sources have been analyzed by using the techniques of

simple percentages, averages etc.

CHAPTER NO: 4

FINDINGS

CHAPTER NO: 4

FINDINGS

The most of the respondents has answered general objective is to be able to generate

income

Most of the respondents use bank deposits

100% of the respondents have account in bank

From the total number of respondents 70% have saving accounts

80% of the respondents have taken policy from post office

The 30% number of respondents said that they have fixed deposit account in post

office

40% have taken policy for the period of less than 5 year or 5 year

Some of them answered that they get information from agent

50% respondents said that their main concern is investment

Most of them answered they are satisfied with a bank

CHAPTER NO: 5

CONCLUSION

CHAPTER NO: 5

CONCLUSION

Post office provides various schemes for safe investment of surplus funds.

However, the return on investment is rather low.

The interest rates are reduced considerably in recent years.

Such trend of lowering of interest rate is applicable to all types of savings schemes in

India.

The postal rules and procedures are lengthy.

Moreover, quick service and personal attention are not given due to inadequate staff,

use of old methods and procedures, etc.

CHAPTER NO: 6

APPENDIX

CHAPTER NO: 6

APPENDIX

ANNEXURE-QUESTIONNAIRE

NM COLLEGE OF COMMERCE & ECONOMICS

Name: ______________________________

Address: _____________________________

Email Id: _____________________________

MobileNumber:_________________

2. While making an investment, what is your general objective or goal?

B) To be able to generate income B) To ensure growth in my income

C) Appreciation of capital

2. According to you, which tool of investment do you generally use?

A) Bank deposits B) Post office plans & schemes

C) Gold D) Other____________

3. Do you have account in bank?

A) Yes B) No

4. Which type of account do you have with bank?

A) Saving B) Recurring

C) Current D) Fixed

5. Do you have taken any policy from post office?

A) Yes B) No

6. Which type of account do you have in post office?

A) Saving bank B) Fixed deposit

C) Recurring deposit

7. For what period you have taken the policy?

A) Less than 1 year or 1year B) Less than 3 year or 3 years

C) Less than 5 year or 5 year D) Less than 10 year or 10 years

8. From where do you get the information about postal saving scheme?

A) Newspaper B) Agent

C) Internet D) Other

9. What is your main concern while taking postal saving scheme?

A) Tax benefit B) Investment

C) Security D) Other

10. Have you suffered from any loss from postal saving scheme or bank?

A) Banks B) Postal offices

11. Which services does satisfied you the most?

A) Bank B) Post offices

12. According to you which services provider give greater interest rate?

A) Bank B) Post office

BIBILIOGRAPHY

www.indiapost.gov.in

www.moneycontrol.com 

www.onemint.com

www.investmentkit.com

www.webindia123.com