Lowering of interest rates of deposits only escalates bank profits

Thursday, 30 July 2020 00:00 - - {{hitsCtrl.values.hits}}

The motive of the government decision to lower the interest rates of deposits was predominantly to engross the banks to lend at lower interest rates for entrepreneurs to boost the economy of the country which is in dire straits. However would this proposal prove productive? Obviously not so practically or on paper.

Owing to this absurd stunt has left the senior citizens and pensioners high and dry resulting in unprecedented agony and anguish to them. As a reader it is a real pleasure for highlighting the grievances on behalf of so many distraught senior citizens and pensioners particularly as they have no access to the media.

This much spoken of government’s harsh decision to lower interest rates has made the lives of senior citizen’s and pensioners miserable with escalating high cost of living, skyrocketing cost of medical expenses etc. It is pertinent to mention that monthly interest rates on fixed deposits which they mostly rely upon have been reduced to alarmingly low 6% and 7 % per annum.

All senior citizens are not receiving or entitled for a pension depend solely on monthly fixed deposit interest as the regular source of income for living. These deposits are from the life-long savings which they had saved targeting their futures.

As a result of lowering interest rates of deposits their plans have all been shattered causing them to be wondering how to make ends meet. At this dire juncture the intervention of the President is needed to revoke this decision of lowering the interest rates of deposits. In relation to the number of persons who benefit from the derived monthly interest the amounts of loans granted to small and medium scale entrepreneurs is very negligible. By this decision of the government only helps the banks to escalate their profit margins which are already at peak levels.

The only redress the senior folk benefits is by the Central Bank’s special scheme of 15% interest for senior citizens. However, in this too the senior citizens have been slapped and battered with a 1.5 million ceiling.

In comparison to the reduction of interest rates of deposits if one takes into account the number of loans granted to entrepreneurs at lower interest rates the answer would be very negligible, particularly as the banks to not take risks to lend to entrepreneurs whom they believe to have projects not viable. The banks of course would show enhanced profits at the end of the year as they have paid the depositors lower interest rates. This is a blessing in disguise for the management of banks at the receiving end of impoverished pensioners and senior citizens. In the above context, the intervention of the President is most needed to bring about redress to senior citizens and pensioners.

Sunil Thenabadu in Brisbane