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July 16, 2007 14:46 IST
High interest rates on bank deposits have shooed investors away from government's small saving schemes, which have seen a sharp decline of 21 per cent during 2006-07, Assocham Eco Pulse Study said on Monday.
The study on 'Growth Trend of Small Savings Schemes' revealed that collections under different small saving schemes run by state and Central governments registered a 21 per cent drop in 2006-07 as compared to compound annual growth rate of 13 per cent during six year-period from 2000-01 to 2005-06.
However, saving deposits with banks increased by 14 per cent maintaining CAGR of 19 per cent. "High interest regime has resulted in competition for small saving schemes from the commercial banks. With private fund managers gaining strength in financial market, the small savings could face some more loss in its deposits," Assocham President Venugopal Dhoot said.
Total receipts under the small savings schemes during 2006-07 were worth Rs 1,37,560 crore (Rs 1,375.6 billion) as compared to Rs 1,73,283 crore (Rs 1,732.83 billion) in the previous year. The amount outstanding in these schemes was Rs 5,59,932 crore (Rs 5,599.32 billion).
While total deposits with commercial banks were at Rs 6,55,274 crore (Rs 6,552.74 billion) at the end of FY07, as commercial banks raised deposit rates by 200 basis points with the Reserve Bank tightening the money flow in the market.
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