You may get loans against your post office savings

The Post Office Savings Bank Scheme is an agency which functions under the department of posts on behalf of the ministry of finance. It is the oldest and largest banking institution in the country.

There are around 14 crore account holders with the 1.5 lakh post offices across country; all these years have been denied credit against their investments in various savings schemes because the post offices are not authorized to give credit against investment in various savings schemes. Therefore people especially living in the rural areas are dependent on local moneylenders and banks for credit.

Jyotiradiya Scindia, union minister for state for communication and information technology has advised finance minister P Chidambarm to authorize department of post for sanctioning loan against investments in savings schemes such as National Saving Certificates (NSC), Kisan Vikas Patras (KVP) and other instruments of investments.

As per data available from department of post more than Rs 97,000 crore is deposited under the various schemes. Currently, under the NSC and KVP rules, many depositors can take loans from public sector banks by pledging their investment certificates under NSC and KVP as security. However, the department of post has not been authorized to sanction loan against such investment.

Scindia wrote a letter to the finance minister, he stated, “Many depositors particularly those residing in rural areas are facing difficulties in getting loans against their own deposits and have to approach local financers or banks which are using their discretion for sanctioning loans and charge high rate of interest.”

Scindia gave an advice that if the department of post is authorized to sanction loans against deposits made under small savings schemes it will be helpful for large number of small investors in accessing credit especially the rural people. This will also generate greater revenue, which had been badly impacted by the private couriers Companies.

In India the postal department has a huge network of more than 1, 55,000 post offices, the DoP is also looking at tie-ups with other banks for the distribution of housing loans in the rural areas. India Post in its bid to leverage its reach has also started retailing various financial products.

Currently India Post is selling mutual fund products of various banks with which it had a tie-up with UTI MF, Principal PNB AMC, Prudential ICICI and SBI Mutual Fund. It has also signed a joint venture pact with the Centurion Bank of Punjab for business in foreign exchange.