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Public sector banks

Subhash Chandra Agrawal, New Delhi

The Finance Ministry and the Reserve Bank of India should reschedule various savings schemes in nationalised banks, to benefit both the banks and the depositors. Many private banks have imitated `Corpclassic' scheme of the public sector Corporation Bank.

This scheme gives dual benefit of flexibility of savings account and high return of fixed deposit (FDR), that too without going to the bank for renewals. Now since the RBI has withdrawn facility of back-dated renewal of FDRs, FDR-linked savings accounts (with Rs 5,000 minimum deposit) should be introduced in all computerised branches of nationalised banks.

However, ordinary savings accounts may continue with Rs 1,000 as minimum deposit for accounts with cheque book facility, and Rs 100 for accounts without cheque book facility. There should be common rates of interest on deposits and savings accounts in al l public sector banks.

Interest in savings accounts may be credited yearly (instead of present half-yearly) on minimum deposit in multiples of 1,000 in a month. Cheque book charges may also be levied on ordinary savings accounts, but not on FDR-linked savings accounts with hig her minimum deposit.

A vast network of nationalised banks should be utilised effectively by introducing tax-benefit schemes such as tax-free bonds, National Savings Certificates (NSC), National Savings Schemes (NSS), Public Provident Fund (PPF), and so on, in all branches of public sector banks, thereby abolishing system of commissions paid to private brokers on such tax-saving schemes.

The Finance Ministry should take effective steps to make public sector bank s function effectively, especially in light of competition from private banks.