SL senior citizens have bank deposits worth Rs.750 bln
Some 750,000 senior citizens hold accounts in 33 banks worth Rs. 750 billion, data by Sri Lanka Banks’ Association (SLBA) shows. A senior citizen is defined as one who is 59 + years.
This data collected at the request of the Central Bank (CB) on the back of the SLBA urging the CB and the Treasury to extend a scheme in the proposed 2015 budget applicable to state banks to pay 12 per cent interest rates to senior citizens – to cover losses for banks. “We’ll present this data to the CB this week,” Upali de Silva, President SLBA told the Business Times. S.R. Attygalle, Deputy Secretary to the Treasury confirmed, saying that Treasury officials will also attend this meeting.
The state banks are also awaiting Treasury and CB direction to offer a 12 per cent annual interest rate for deposits of pensioners and elders as instructed in this year’s budget, according to officials of these banks. Currently interest rates on deposits are around 7-8 per cent maximum on par with lending rates which are higher. But banks would lose if forced to offer 12 per cent deposit rates as lending cannot be raised to 4-5 per cent more than current rates. Furthermore even the currently, low lending rates is not attracting interest from the corporate sector.
To cover any deficit between lending and borrowing rates, the Treasury is to float a $30 billion bond issue at 12 per cent interest in which state banks can invest.
CB sources said that implementation of this proposal is that an upper limit will be slapped on deposits which will be offered a 12 per cent annual interest rate. “As an example, those deposits below Rs.1 million will be granted this 12 per cent annual interest rate,” a Treasury source said.