Stable interest income for elderly people

Tuesday, 11 November 2014 01:18 - - {{hitsCtrl.values.hits}}

It was very pleasing to observe that in accordance with the Budget Proposals 2015, an increased interest at 12% would be offered to pensioners and elders who maintain deposits with state banks, presumably with effect from 01.04.2015. In this connection the following clarifications/confirmations should be given: Elderly people mean senior citizens who have reached the age of 55 as at 31.03.2015. The retirement age for state employees is at present 63. Therefore they will become pensioners only after reaching 63 years except those who have already retired. In that case even a non-pensioner should be paid interest at 12% if he reaches 55 as at 31.03.2015. Deposits will flow into state banks on 01.04.2015, by

Transfers from other commercial banks

Transfers within state banks

New funds

At present people may have deposits in state banks maturing after 31.03.2015 (say 31.08.2015). At present, the average rate of interest is 7.75%. Therefore their deposits should qualify for 12% interest after 31.03.2015 for the balance period (i.e. six months). If not they may have to withdraw the deposits at a penal rate of interest (5% at present) on 31.03.2015 and re-deposit on 01.04.2015. In that case the loss could be 1.375% according to the example mentioned above. Concessions granted in the Budget proposals should be enjoyed in full without disruption. Therefore instructions should be issued that 12% interest be paid on all deposits in force (not matured as at 31.03.2015) for the period after 01.04.2015. Similarly, people who reach 55 during from 01.04.2015 to 31.03.2016 should qualify for 12% on deposits once they reach 55 for the period after they reach 55. These matters should be clarified early to facilitate the elders/seniors to manage their deposits while the banks should also be instructed accordingly. S.R. Balachandran (BSc., FCA, FCMA (Sri Lanka)) from Wellawatte