The Daily Deposit Scheme is a unique banking initiative designed to cater specifically to daily wage earners, small traders, and individuals with irregular income streams. In India, Co-operative banks play a crucial role in promoting financial inclusion by offering this scheme. Let’s learn more in details about how it works, what are the benefits of it?
What is Daily Deposit Scheme in Co-operative banks?
Objective
The primary goal of the Daily Deposit Scheme is to encourage regular savings among individuals who earn daily wages or have unpredictable income patterns. By allowing small deposits on a daily basis, this scheme aims to instill financial discipline and provide a safe path for collecting funds.
Deposit Frequency
Unlike traditional fixed deposits, where you deposit a lump sum amount for a fixed tenure, the Daily Deposit Scheme allows you to contribute small sums daily. You can start with as little as Rs. 25 per day.
Doorstep Collection
One of the unique feature of this scheme is doorstep collection. An authorized agent from the co-operative bank visits the account holder’s residence or workplace to collect the daily deposit. This convenience ensures that even those with busy schedules can get benefit of Daily Deposit Scheme.
Interest and Commission
The interest rate on daily deposits is typically modest, but it accumulates over time. However, there’s a catch: if you close the account before a specified period (usually eight or nine months), no interest is paid and there may be no penalty. In case of pre maturity closure, a 3% to 4% commission is deducted from the deposited amount and other taxes may be applicable.
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Benefits of the Daily Deposit Scheme
Financial Inclusion: The scheme targets marginalized sections of society, providing them with access to formal banking services. It bridges the gap between daily wage earners and the banking system.
Flexible Deposits: Participants can adjust their daily deposit amounts based on their income fluctuations. This flexibility makes it suitable for irregular earners.
No Lump Sum Pressure: Unlike traditional fixed deposits, where a lump sum is required upfront, the Daily Deposit Scheme allows gradual savings without burdening the depositor.
Agent Employment: The scheme generates employment opportunities for agents who collect deposits from account holders. It’s a win-win situation for both the bank and the agents.
Considerations for Investors
Long-Term Commitment: To maximize returns, consider keeping the account active for at least eight to nine months. Early withdrawals result in commission deductions.
Interest Rate: While the interest rate may be lower than other investment options, the cumulative effect over time can still be significant. Some co-operative banks provides interest up 6% (Reducing Interest rate)
Risk Profile: Daily deposits are safe, but they don’t offer high returns. Investors seeking higher yields should explore other investment opportunities.
Conclusion
The Daily Deposit Scheme in co-operative banks serves as a financial lifeline for those who rely on daily earnings. By fostering a savings habit and providing doorstep convenience, it contributes to financial stability and inclusion. As an investor, weigh the pros and cons carefully before participating in this scheme.
