Every rural and urban branch needs to generate 150 and 50 subscriptions, respectively, each year
Poor subscriptions garnered by public sector banks under the new pension scheme (NPS) have prompted the Finance Ministry to set targets for them.
According to data collated by the Ministry, out of the total subscription of 6.44 lakhs in 2011-12, public sector banks (PSBs) could garner only 501 subscriptions under NPS. These subscriptions were generated through PSB branches which have been designated as Points of Presence (PoP).
Given the dismal performance of PoPs, the Ministry said every rural and urban branch of PSBs will have to generate 150 and 50 subscriptions, respectively, every year.
This is to ensure that the NPS is available to all citizens in the unorganised sector and the economically disadvantaged sections of society.
As on September-end 2011, out of the 26 PSBs, 12 had registered about 8,000 branches as PoPs with the Pension Fund Regulatory and Development Authority. In 2010-11, the Government rolled out an NPS (called Swavalamban Yojana) for all citizens (18-60 years) in the unorganised sector who are not covered by any social security scheme, including the Employees Provident Fund. NPS has been developed with the objective of providing old age income security to all citizens.
The Finance Minister then announced that all subscribers registered in FY2010-11 will be eligible for getting a contribution of Rs 1,000 a year from the Government for four years beginning the same financial year.
Subscribers registered after 2010-11 will get the contribution up to 2013-14.
The abovementioned contribution benefit is available only to persons who join the NPS with a minimum contribution of Rs 1,000 and a maximum contribution of Rs 12,000 an annum.
The Ministry said the number of Swavalamban accounts opened should be taken into consideration during the annual performance appraisal of bank employees who have been assigned the responsibility of marketing the scheme. It emphasised that necessary training should be imparted to the employees for opening the accounts.
No indicative returns
Since the returns that customers will get cannot be indicated, bank employees have a tough time convincing them to subscribe to the scheme.
According to Mr S. Govindan, General Manager, Union Bank of India, employee bandwidth is already stretched as they have to sell/ service many products and services.
Moreover, in the absence of indicative returns, it takes quiet a bit of convincing to get a customer to subscribe to NPS.
“Bank customers are used to getting a fixed return when they put money in savings and fixed deposit. So, the first question they ask when the NPS is marketed to them is what is the return? The ‘market related return’ answer does not impress them,” said another banker.