Guess how many subscriptions did public sector banks manage to get for the New Pension Scheme in 2011-12?
A measly 511, of the total subscription of 6.44 lakh.
The NPS is aimed at providing social security to the unorgainised sector, where there is no retirement benefit to the employees unlike the government sector. The main attraction of the scheme is the fee — 0.00009 percent, which is the lowest globally.
The figure is baffling, considering the number of branches public sector banks have across rural and urban areas.
The sorry number has, however, woken up the government. The finance ministry has set targets for state-run banks to generate subscriptions, a report in the Business Line said.
The government had made select bank branches as points of presence, in a bid to sell the scheme through banks.
The authorised branches of a POP, called Point of Presence Service Providers (POP-SPs), will act as collection points and extend a number of customer services to NPS subscribers.
The target set by the finance ministry are 150 subscriptions for a rural branch and 50 for an urban one.
The government wants the subscription targets to be linked to the employees’ appraisal.
The employees, however, are already burdened with a lot of products to be sold. Moreover, the scheme does not have an indicative return and this is also deterring investors from it.
“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,” a banker was quoted as saying in the report.
An Economic Times report, however, says that there has been a whopping 144 percent increase in the scheme corpus in 2011-12 to Rs 251.67 crore. The number of subscribers also rose to 74,056 from 38,693.
“People are getting aware about their retirement needs. We have been propagating the need for pension. It is going to become attractive once the DTC is implemented,” Nagendra Bhatnagar, CEO, NPS Trust,was been quoted as saying in the report.
With the public sector banks too forced to increase the subscriptions, the NPS is likely to get more investment this financial year.