THE SIGNIFICANT ROLE OF POST OFFICE SAVINGS BANK SCHEMES IN MOBILIZING DOMESTIC SAVINGS IN INDIA: AN EMPIRICAL ANALYSIS

Abstract

This study tests the hypothesis that Post Office Savings Bank (POSB) schemes play a significant role in the procurement of domestic savings in India. In order to mobilize household savings, especially in rural and semi-urban regions, the Department of Posts operates POSB programs, such as the National Savings Certificates (NSC), Public Provident Fund (PPF), and Recurring Deposits (RD). This study evaluates the effect of POSB schemes on domestic savings rates using econometric models and time-series data from 2000 to 2023. The findings cast doubt on the idea because they show a statistically small contribution. Declining interest rates, limited digital outreach, and rivalry from commercial financial institutions are some of the factors that could account for this result. In the current financial environment, the results highlight the necessity of regulatory changes to improve the efficacy of POSB schemes.