A bank is an institution that deals with financial savings and loan facilities. Retail, commercial, and investment banks are the three types of banks. The Union government or Central Bank controls the banking sector in India and all other related activities. The system of postal savings and financial facilities provided by the Indian Postal Department, which falls under the Ministry of Communications, is referred to as the ‘Government Savings Bank’ in India.
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Government Saving Bank Act
The Government Savings Banks Act got its assent on 28th January 1873. The Act of 1873 was modified by introducing timely amendments. This Act established control and directed general public earnings into government savings schemes and was applied all over India. The Act also provides amendments to the law related to the payment of deposits in government saving banks.
What is a Government Saving Bank
The Government Saving Bank (GSB) was founded in 1833 by the British Government. The GSB offers personal and government policy customers, business and public sector customers, savings, credit, and other financial services. By using digital technology, GSB has become a pioneer in fostering savings to bring peace of mind to the lives of citizens.
GSB is frequently used to refer to the Post Office Savings Scheme, where a system of accounts and financial services is provided, which is run by the Indian Postal Department within the Ministry of Communications. This program provides various investment alternatives and savings accounts to satisfy the demands of the people. These accounts provide secure and simple-to-reach investment opportunities and are sanctioned by the government.
Deposit Related to the Estate of a Deceased Person
Section 4 of The Government Savings Banks Act, 1873 talks about nomination by depositors.
1) Any nomination which is made in the prescribed way and intended to give anyone the right to obtain the deposit on the demise of the depositor will give such right on the death of the depositor to such person. This right will exclude all other persons to be paid the deposit when the nomination is consistent with any provision of law.
2) If the condition arises such that the nominated person dies before the depositor or multiple nominees die before the depositor then such nomination by the depositor will become void.
3) When the nominee appointed is a minor, any depositor will appoint another person in a prescribed manner for receiving a deposit on the depositor’s death. This arrangement is only valid till the nominee is a minor.
Section 4A of The Government Savings Banks Act, 1873 details the payment on death of depositor
1. When a nomination is made by a depositor and such a person dies, then the nominee receives payment of the amount.
2. In the case of a minor nominee, another designated person will be getting the payment till the nominee remains a minority. If there is no such person, then the guardian will receive the payment.
3. When there is more than one nominee and one of the nominees dies, then the other surviving nominee will get the payment.
4. When a depositor dies without a making nomination and probate of his will or letters of administration are produced to the authorised officer of the Government Saving Bank then the authorised officer can distribute the same to any individual who, in his opinion, has a right to receive the payment or to manage the estate of the deceased person.
Deposits Belonging to Minors
Section 10 of The Government Savings Banks Act of 1873 talks about the payment of deposits to minors or guardians.
When any money is deposited by a minor or on behalf of him, then it can be given directly to the minor.
If the money was deposited by someone else on behalf of the minor, then it can be given to the guardian of the minor for the benefit of the minor. This also includes any interest earned on the deposit.
When the minor or guardian receives the money based on this rule, their acknowledgement is considered sufficient to show that the payment has been properly made.
Deposits Belonging to Lunatics
Section 12 of The Government Savings Banks Act, 1873 details the payment of deposits belonging to lunatics.
If the depositor develops lunacy such that he is unable to manage his affairs, and if such behaviour or incompetence is demonstrated and proven to the bank’s secretary who is holding the funds, then such Secretary may, from time to time, render payments out of the deposit to any appropriate person, and the acknowledgement of such a person which is given for the money given under this section is considered an adequate discharge. This section permits payments to anybody other than the committee or manager of the depositor’s estate when they have been lawfully chosen.
Deposits Made by Married Women
Section 13 of The Government Savings Banks Act, of 1873 details the payment of married women’s deposits. Currently, this section is omitted.
Miscellaneous
Section 14 of The GSB Act, of 1873 talks about the protection of action taken in good faith. There will be no suit or legal action instituted against the Secretary or any other officer of the Government in relation to whatever is done by him/her or purported to be done by this Act in good faith.
Section 15 of The GSB Act of 1873 details the Power of the Central Government to make rules for this Act agreed upon or disagreed by both the houses of parliament.
Conclusion
A government savings bank may be used more broadly to refer to any government-sponsored entity that provides both banking services and saving schemes. The Post Office Savings Scheme’s investments and saving alternatives are designed to give a wide range of benefits to people in India by guaranteeing security in their finances, savings, and investment opportunities, especially in places in which conventional banking services are unavailable.
The main goals of the government savings program have been to encourage inhabitants of the nation to practise simple living and save money. The focus is on enlisting the small depositor in the savings movement, as the phrase “small savings” suggests. The Post Office Savings Bank has served as the primary base for these programs throughout India.
FAQs
What does a Government Savings Bank mean?
As per Section 3(g) of The Government Savings Banks Act of 1873, a government savings bank includes a Post Office Savings Bank, the State Bank of India or another banking organisation, and any other business or institution that the Central Government notifies.
What are Savings Schemes?
As per Section 3(k) of The Government Savings Banks Act 1873 Savings Certificates and the Public Provident Fund Scheme, listed in the Schedule are Saving schemes. These schemes are the various financial benefits granted to a person for providing a safe and reliable investment.
Who is a depositor?
As per Section 3(e) of Act a depositor is a person who has money deposited in a government savings bank by them or on their behalf, and the term “deposit” refers to that money.
Who has the authority to frame a new savings scheme?
The central government has the authority. These programs are intended to promote saving and provide general people secure investing options.
