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History of Saving in Government Saving in India

In India savings based on a legislative framework of Government banks has a history of nearly 130 years. Some historians, trace the genesis of the savings movement to 1834, when the first savings bank was established in Calcutta by the Government. However, the Government Savings Bank Act was passed in 1873, and it was in 1882 that the Post Office Savings Bank of India came into existence. In 1886 The Government District Savings Banks were merged with the Post Office Savings Bank (POSB). While under British Rule, the Government of India had also set up the “National Savings Central Bureau” with the objectives of promoting thrift, containing inflationary trends in the economy caused by the Second World War, and mobilizing funds to finance the war. It is said, however that this drive did not gain momentum as the people were not enthusiastic about funding an alien war effort.

After independence, in 1947, it was felt that more of an impetus has to be given to the savings movement and the National Savings Organisation NSO (now NSI) was created in 1948. The words of the then Prime Minister Pandit Jawaharlal Nehru signify the crucial role envisaged for the national savings movement in the context of domestic savings as a force for national development.

“I attach great importance to the movement of National Savings. It is important not only because we want people to save and to apply these savings for our development plans, but also because it reaches a large number of people. It is not enough merely to make appeals. There must be organization behind it also so as to reach every village. Every person who participates in this campaign and adds to the savings not only helps in the fulfillment of our Second Five Year Plan but also becomes in a sense a sharer in it. I wish this campaign every success... '

Small savings were considered a priority concern of the Government. The Constitution of India, adopted in 1949, lists the ‘Post Office Savings Bank’ in its Seventh Schedule, Item No. 39. Utilizing the Government Savings Certificates Act of 1959 and the Public Provident Fund Act of 1968, the Ministry of Finance (MoF) framed numerous small savings plans under these acts.

The primary objectives of the small savings programme has been to promote the habit of thrift and savings among citizens of the country. The emphasis, as the words “small savings” suggest, is to bring the small depositor into the fold of the savings movement. The Post Office Savings Bank has been the main vehicle for these plans across the length and breadth of India since its establishment 123 years ago. Post Office Savings Banks were opened in 1882. Some of the small savings schemes i.e. Public Provident Fund and Senior Citizen's Savings Scheme are also operated through nationalized banks and 3 private banks i.e. ICICI, HDFC and Axis Bank.