The Telegraph
 
 
IN TODAY'S PAPER
CITY NEWSLINES
 
 
ARCHIVES
Since 1st March, 1999
 
THE TELEGRAPH
 
 
Email This Page
Long queue for relief bonds

Mumbai, Feb. 26: The current fiscal has been harsh on retail investors and pensioners who depend solely on interest income for their livelihood.

Jittery investors were seen clogging post offices and banks in a last minute bid to invest in Reserve Bank’s tax saving 8 per cent relief bonds and post office savings before the finance minister reviews the interest rates on Friday.

“Retail investors are coming in droves to invest in post office schemes and RBI bonds as they fear that the interest rates would be further pruned in the coming budget,” says Pankaj Modi, an agent for PPF and post office savings instruments.

Vidya S Wakharkar, an agent for post office schemes, rued that she has to queue up by 6.30 am at the post office to ensure that her clients get the peak rate of 9 per cent before a probable drop of 50 basis points in these schemes by March 1.

“Some agents arrive around 6 am, two hours before the post offices open, as they can apply only up to 11 AM. While the counters for retail investors are open till 1 PM,” she added.

Moreover, post offices are also warning investors that cheques realised after March 1 may attract a lower interest rate if the finance minister decides to streamline the rates in line with other gilts.

Normally, there is a rush of retail investors who make a beeline before post offices to beat the revision in interest rates. But retail investors and agents aver that this is the first time the city post offices are seeing such a rush of investors.

Market is expecting the finance minister to cut the interest rates on small savings by 50 basis to 100 basis points in the forthcoming budget. Investors realise that investing in post office monthly income schemes with a 9 per cent interest rate could yield a return of almost 10.34 per cent per annum, which is very attractive in the current low interest rate regime.

Yields on fixed interest instruments like fixed deposits have been falling sharply. The volatility witnessed in the debt segment has also frightened small investors away from the fixed income schemes.

Top
Email This Page