Need of the hour is to popularise ‘savings habit’: Amunugama

“The socialisation of the savings habit is the need of the time,” said Minister Amunugama, whilst opening the National Savings Bank’s branch at Deltota in the Kandy District.

The Senior Minister for International Monetary Co-operation and Deputy Minister of Finance and Planning Dr. Sarath Amunugama stated that it was an absolute necessity to popularise the ‘savings habit’.

“In the plantation history of our country Hewaheta is a prominent place. Originally foreigners who came to Sri Lanka commenced growing coffee. However a leaf-disease destroyed the coffee plantations. Thereafter they decided to plant tea. The plantation of tea commenced in this area. However today, I am drawing your attention to some other matter. The planting of tea became a big industry solely due to the capabilities of the people who were involved in the planting of tea and also due to the loan facilities given by the banks to improve and develop the tea industry. None of the plantations in the area were established out of the funds of the owners. The owners were able to invest only a small quantum of money in the plantations. From the major Banks in England loans were obtained, and it is from such funds that the plantations were developed,” he explained.

Amunugama said there are two methods of investments on any type of industry. One method is to invest one’s own money. The other is to borrow money from banks and invest such money in industry. He said the banking system of any country must be strengthened for a country to be rich and for its trade and commerce to prosper.

Amunugama noted that when the banking system of a country develops, invariably the country’s economy too will progress. Then the banks will provide the required funds to develop the economy. If the economy does not progress, the banks will collapse. From that angle one has to concede that the banks in Sri Lanka have progressed satisfactorily and an indication of that fact is the progress made in the economic development of the country, he pointed out.

“How do the banks receive money? Most people think that the Government gives them the money. However the Government does not give such money. The Government gives them any money only when they are unable to obtain money. Banks should raise the money they require out of the savings of their customers. Banks continue to exist in the world due to the confidence placed on their customers.”

“The method of attracting the flow of money to the banks is through the technique of the interest rates payable to their customers. If money is hoarded in suitcases or hidden in pots and pans, such money will not receive any interest. Even after the lapse of 10 years, if one opens the suitcases, the value of the money decreases; it by no means increases. On the other hand if the money is deposited in a bank, at today’s rates the money will have a yield of 15% interest.

“The banking system of a country gives a value to the money deposited by the customers and consequently, investors are able to obtain such money for investment purposes. The most important mechanism in the development of a country is its banking system. When people save, the country too progresses.”

A special feature of the National Savings Bank is its relationship with a large number of people who are capable of saving. This includes school children, school teachers, Government servants, cultivators and investors from such areas.

The existing mechanism in the country to attract money to the banking system is inadequate. When the National Savings Bank was established Dr. N.M. Perera stated in Parliament as follows: “I am proud to be the Minister of Finance of this country. Why? Because every child will drop a few coins to the till and thereafter take that money to a bank to paste a stamp indicating the amount of money saved.” “When we were school children we had Savings Pass Books,” said Amunugama.

“We are importing some goods that can be locally produced. At one stage rice became a political issue. When an election was nearby numerous promises about rice were made to the electorate. But today there is no rice problem as such. We are self-sufficient in regard to our rice requirements. Today we are self sufficient in regard to most of our requirements. We can be self sufficient in regard to our requirements of milk as well.

“In view of these developments, socialisation of the savings habit is the urgent need of our time and it should be a part and parcel of the duties of Government servants, and bank employees. Today most people speak of expenditure of public funds. With the exception of the Ministry of Finance, other Ministries submit proposals relating to expenditure. Proposals which bring in revenue to the Government are very minimal. There must be a balance between revenue and expenditure.”

Amunugama said that today the Government invests a large sum of money on infrastructural developments and these require the expenditure of vast sums of money. Entrepreneurs involved in these projects should invest their funds in development projects in their own areas, he added.

“When we give a rupee or two to the Post Office, we get back the pass book with a stamp pasted on it. In that era we did that with enthusiasm and dedication. From that we derived the concept of savings. The country too got accustomed to the idea of savings. In the whole of Asia, it is only in Sri Lanka that there were children who saved. Today that habit is lost. We must all reflect on this matter, we must revive the earlier habit. We must create a background for every child to save 10 or 15 rupees at childhood. If the savings habit is instilled, the child is induced and encouraged to continue it throughout his life.

“Parents who are accustomed to the savings habit often say ‘don’t waste’. In a Buddhist country, frugality must be a norm in life. It is a powerful economic theory. However, we are moving far away from it. We must get accustomed to save a part of our income. The public servant must devote his attention to the needs of the public expeditiously and with a proper understanding of the problems. All the development work in the country is being undertaken from the taxes collected from the small men of our country. We are all servants of those small men, the have-nots. The parents who come to Government offices should be treated with compassion and efforts should be made to comply with their requirements. Public servants should be dedicated in the performance of their duties.”

When an application for a loan is submitted, the rules governing the grant of the loan should be explained in simple language and the loan should be granted to the public without any delay, Amunugama stressed.

He added that presently the Government is taking action to train public servants and bank employees to act in a cordial manner with applicants for loans. “That is necessary to ensure that the public service is geared to serve the public in a successful manner. If this does not happen a country will never progress,” Amunugama concluded.