Evaluating the Impact of Demonetization on Postal Savings Schemes: A Case Study of the Agra Region

Demonetization policy by Government of India in November 2016 was a turning point in financial inclusion and informal saving behavior in both rural and urban India. Postal Saving Schemes (PSS) as one of the oldest forms of saving tool, and also the most available instrument among the population, experienced the most dramatic changes during and following the event. The present paper also analyzes how demonetization has affected the trends, usage and perception of Postal Saving Schemes amongst its customers in the Agra region. Data using a formulated questionnaire were gathered by means of a sample size containing 250 respondents (urban and rural account holders) in different post offices all over Agra. The research design used in the study is descriptive as it aims at studying changes in deposits, opening of new accounts and withdrawal patterns after demonetization. The findings indicate that although short-term effects of the demonetization were significant influx of deposits to the banking systems, long-term patterns of trust and use of Pss were based on the level of awareness, financial literacy and other viable banking systems. At the policy level, the research underlines the importance of postal savings as an instrument of financial inclusion in cases of transitional economic policies and makes certain policy suggestions to enhance these schemes in case of further monetary changes.