In India as interest rates went up from 6 to 7% to a healthy 9/10% most of the funds going into postal deposits dried up so much so that small savings did not find any takers. Then came the news that the 10% bonus on POMIS would be stopped.This meant that the small savings depositors deserted the last bastion of profits of the Indian Post and shifted to Bank deposits.
The govt has belatedly dangled some lollipops to bring back or woo the depositor.
Deposits qualify for Sec 80/c, in respect of investments with effect from April 1, 2007 ie Fy 2007/08 on
1. Senior Citizens Savings Scheme or SCSS
2. Postal 5 yr time deposit
Secondly they have brought back 5% bonus on POMIS for investments made on or after December 8, 2007.
Now will this work and draw in fresh investments?
I still doubt it, as most banks still offer a 5yr tax deposit at 9 to 9.5% pa without the service snares and the delays that one is so accustomed to while opening a postal deposit.