A Study on Investors’ Perception and Attitude of Post Office Savings Schemes with Reference to Palappallam Post Office

In India, post office savings schemes provide a safe, risk-free and attractive investment option, and their savings instruments are offered across the country’s many post offices. India Post, which controls the postal chain of the country, also provides several deposit avenues for investors, commonly known as post office savings schemes. These schemes were introduced to provide investment avenues and to inculcate savings discipline among Indians from across economic classes. Every post office provides these savings schemes to enable individuals from across India to apply and enrol easily. Savings and investment are key requirements for the growth and development of an economy. However, a lack of savings and investment is common in developing countries. The low level of domestic savings is a major problem in developing economies because of high unemployment, low wages, the engagement of a large proportion of the population in the informal sector and the poor performance of the economy. The interaction between savings and investment has become a subject of great interest and debate among macroeconomists. Saving has generally been held to be one of the major determinants of economic development. According to Adam Smith, “Whenever a person saves from his revenue, he adds to his capital and since the capital of an individual can be increased only by what he saves from his annual revenue, so also the capital of a society can be increased only in the same manner”.

In India, during the pre-independence period, people spent most of their income on consumption and only a small amount of income was left as savings. Therefore, the saving rate was very low, especially in the rural sector. After independence in 1947, the major objective of government policy has been the promotion of savings and capital formation, as they are the primary instruments of economic growth. The Indian postal system is a vast infrastructure providing the ultimate access for poor people to basic services and last-mile connectivity, both literally and along the development path, to a billion people.

Teli and Singh (2017) conducted a study of 50 respondents in Rajsamand district and stated that most of the respondents were aware of post office deposit schemes through their friends and relatives. The level of awareness of the various post office schemes is very low, except for recurring deposits and post office savings bank accounts. The authors also pointed out that the post office small savings scheme is good enough for rural areas, but that if deposits are to be increased, officials should increase awareness through advertising and agents.

Rameshkumar (2018) found that post office savings schemes are among the best investment schemes for rural working women when compared with other investment schemes. Rural working women investors have great faith in, and a positive attitude towards, post office savings schemes because there is no complicated procedure in making an investment, and because of easy accessibility, security and safety of investment, premature closure, etc.

One study analysed the various impacts of the development of information and communication technology on India Post services. It conducted a SWOT analysis of India Post and found that the customers of India Post expect services equal to the standards of banks and the insurance industry.

Another study discussed the introduction of ATM services in India Post. India Post ATM services require changes in technology and in social, economic and cultural factors. The service would create a monopoly in the market if some effective changes were made.

According to the findings of Anuradha and Hema (2023), women who are financially literate not only have the information but also have the ability to make wiser financial judgements. Financial literacy motivates people to support their families, take care of their own finances, etc. Many measures are being undertaken by different organisations to increase financial literacy, but awareness campaigns through seminars, commercials, etc. are still needed.

The objectives of this study are:

1. To know the level of awareness of the various post office schemes among the public.
2. To know the various postal savings schemes available to customers.
3. To examine the purpose of investment in the various post office schemes.

This research is an analytical study. The present study is based on primary and secondary data. The secondary data were collected from journals, magazines and websites. The primary data were collected from investors in the Palappallam area. Savings schemes play an essential role in people’s lives by helping them save money for their needs. Using the convenience sampling method, this study focused on the Palappallam post office, and a sample of 80 respondents was taken from the Palappallam area.

• There is no significant relationship between monthly income and investment preference of respondents.
• There is a significant relationship between age and investment preference of respondents.

Palappallam Post Office is located in Palappallam town in Kalkulam taluk, Kanyakumari district, Tamil Nadu. It is a sub-office (SO). A post office (PO) is a facility in charge of sorting, processing and delivering mail to recipients. Post offices are usually regulated and funded by the Government of India (GOI). The PIN code of Palappallam PO is 629159. This post office falls under the Kanyakumari postal division of the Tamil Nadu postal circle. The head office for this sub-office is Nagercoil Head Post Office. Palappallam post office offers all postal services, such as delivery of mail and parcels, money transfer, banking, insurance and retail services. It also provides other services, including passport applications, PO Box distribution and other delivery services, in Palappallam.

Customers in Palappallam can enjoy the various savings schemes available at this post office, which prove to be highly beneficial for the people living in the Palappallam area. The financial services offered by the PO include savings and Postal Life Insurance (PLI). There are various options available to save and invest with post offices. Presently, the government provides the following postal savings schemes for investment by the general public.

1. Public Provident Fund (PPF): PPF is one of the preferred schemes and has a lock-in period of 15 years. Nonetheless, investors can make partial withdrawals after 5 years. A minimum deposit of Rs. 500 per year is required to keep the account active.
2. National Savings Certificate (NSC): Investors can invest in NSC with a small deposit of Rs. 100, as a single individual, jointly or as the guardian of a minor. The lock-in period for this scheme is 5 years. Also, the annual interest on NSCs is reinvested and paid out as an accumulated amount at the time of maturity.
3. Post Office Monthly Income Scheme (MIS): This post office monthly income scheme is another reliable savings instrument that allows you to invest a maximum of Rs. 4.5 lakh individually and Rs. 9 lakh jointly. As an MIS plan, it allows investors to generate a steady monthly income.
4. Sukanya Samriddhi Account (SSY Scheme): Under this Indian post office savings scheme, parents or legal guardians of any girl child up to 10 years of age are eligible to open this account in the child’s name. A maximum of two accounts is allowed per household, one for each of two daughters. Once the child reaches 21 years of age, she is eligible to claim the maturity amount. The maturity of the account also differs according to the girl child’s age on the date of enrolment. Thus, with the age limit of up to 10 years, the maturity term is accordingly extended beyond 21 years of age. For example, if the child was 5 years old on the date of enrolment, the age at maturity will be 21 years + 5 years, i.e., 26 years.
5. Senior Citizen Savings Scheme: Investors who are 60 years of age, or 55 years of age in the case of voluntary retirement, can deposit up to Rs. 15 lakh over their lifetime in the Senior Citizen Savings Scheme to earn a regular interest income. The plan also comes with a lock-in period of 5 years.
6. Post Office Savings Account: You can also open a savings account with the post office, similar to a savings account with a bank, by depositing a minimum of Rs. 20. You must also maintain a minimum balance of Rs. 50 in the account. India Post also allows you to make online money transfers with your post office savings account.
7. 5-Year Post Office Recurring Deposit Account: With small monthly investments, you can open as many RD accounts as you want with a post office. These investment options allow you to make periodic deposits while enabling substantial corpus creation over the tenure of the investment.
8. Post Office Time Deposit Account: You can also open time deposits as a post office savings scheme for tenures of 1, 2, 3 and 5 years. Even minors over 10 years of age can invest in time deposits along with a guardian. This savings option is similar to the fixed deposits offered by banks.
9. Kisan Vikas Patra (KVP): KVP certificates allow you to earn double the deposit amount in 9 years and 10 months. Also, the deposit can be encashed only after 2.5 years, against the payment of a nominal penalty.

Investors’ attitudes towards post office savings schemes, with special reference to the Palappallam post office, can be studied as a special topic with chi-square analysis. This helps us to understand more about investors’ attitudes towards post office savings schemes.

Age plays a vital role in the attitude of the respondents towards savings. Naturally, people are more inclined towards savings. This is probably because they fall in the earning category, along with the fact that they have the responsibility of shouldering their families. Their scope for earning is also brighter due to their age and opportunities.

Source: Primary data

The age-wise analysis in Table 1 shows that, out of the total of 80 respondents, 2 (3%) belonged to the age group ‘below 25 years’, 30 (37%) to the age group ‘26–45 years’, 33 (41%) to the age group ‘46–60 years’ and 15 (19%) to the age group ‘above 60 years’. Thus, we infer that persons in the age group ‘46–60 years’ are very interested in saving money in post office savings schemes.

Income is a crucial factor in savings. It also influences a person’s social status and standard of living. A person with a higher income has a better scope for savings due to surplus and necessity. Persons with low income are less disposed towards savings due to their lack of surplus money.

Source: Primary data

Table 2 shows the monthly income of the respondents. Out of the total of 80 respondents, 36 (45%) had a monthly income below Rs. 10000, 29 (36%) between Rs. 10000 and Rs. 20000, 10 (13%) between Rs. 20000 and Rs. 30000, and 5 (6%) above Rs. 30000. Thus, we infer that persons with a monthly income below Rs. 10000 are very interested in saving money in post office savings schemes.

Currently, the post office offers many savings schemes, but people are aware of only a limited number of them, such as the post office recurring deposit, post office savings account, Sukanya Samriddhi scheme and senior citizen savings scheme.

Source: Primary data

Table 3 shows the respondents’ awareness of the post office savings schemes. It is seen that, among the 80 respondents, 16% are highly aware of the post office schemes, 57% are neutral about the post office schemes, 18% are not aware of the post office schemes and the remaining 9% are highly not aware of the post office schemes.

Some people use the savings to purchase or construct residential buildings. Some of them invest in productive assets like land, livestock and equipment. Some of them hold savings in the form of financial assets such as deposits in banks, corporate securities, government bonds and insurance policies. Saving has generally been held to be one of the major determinants of economic development.

Source: Primary data

Table 4 shows the purpose of saving. The main purpose of saving, for 75% of the respondents, is safety; the second purpose, for 15% of the respondents, is children’s education; the third purpose, for 4% of the respondents, is to lead a comfortable life; and the remaining purposes, for 3% of the respondents each, are tax benefit and proximity.

The null hypothesis is “There is no significant association between monthly income and investment preference of investors”. From the chi-square analysis in Table 5, it is clear that the calculated value (13.42) is less than the table value (21.026) at the 5% level of significance; therefore, the null hypothesis is accepted. Hence, it is inferred that the investment preference of investors is not significantly associated with income.

The null hypothesis is “There is no significant association between age and investment preference of investors”. From the chi-square analysis in Table 6, it is clear that the calculated value (49.75) is more than the table value (21.026) at the 5% level of significance; therefore, the null hypothesis is rejected. Hence, it is inferred that the investment preference of investors is significantly associated with age.

• Age plays a vital role in the attitude of respondents towards savings. This is probably because they fall in the earning category, along with the fact that they have the responsibility of shouldering their families. Persons in the age group 46–60 years are very interested in saving money in post office savings schemes.
• The majority of the respondents have a monthly income below Rs. 10000. Income is a crucial factor in savings. It also influences a person’s social status and standard of living. A person with a higher income has a better scope for savings due to surplus and necessity. Persons with low income are less disposed towards savings due to their lack of surplus money.
• The post office offers different savings schemes, each unique, to satisfy the needs of different sections of society. The benefits and returns vary depending on the scheme selected. Individuals select schemes based on their income level, affordability and savings objectives.
• The majority of the respondents prefer the post office recurring deposit scheme. Many post office savings schemes satisfy depositors because they provide a safe and secure investment option with a guaranteed return. For all schemes, whether social or financial, some medium is needed to carry the information to the common man. Information regarding post office savings is less publicised than that of other financial institutions. The majority of the respondents gain their knowledge about post office savings schemes through agents.

From testing the hypotheses:

• There is no significant relationship between monthly income and investment preference of respondents.
• There is a significant relationship between age and investment preference of respondents.

• It is strongly suggested that the Department of Posts carry out a careful study of the market structure and offer interest rates at least on par with other financial institutions. Currently, the interest rates offered by post offices are low when compared with those offered by banks. This has become a major hindrance, since many of its traditional customers have chosen other avenues for their deposits.
• The Department of Posts may expand its financial services and introduce savings schemes so that it meets the financial needs of different segments of society.
• The Department of Posts may consider improving and expanding its services in rural areas through information and communication technologies, and adopting information technology-oriented platforms to offer various financial products and services.
• The Department of Posts can also consider increasing its share in parcels and logistics, and introducing e-commerce.

Today, the postal department has to equip itself by improving its services and savings schemes to satisfy its customers. In the light of the changing environment, it has to constantly upgrade its knowledge of the internal and external environment to understand the customer relationship properly. Saving is important in human life, as savings give life and security. One of the main motives of the Department of Posts is to uplift the savings of the people. Savings not only help the people but also help economic development.