15 % deposit interest for senior citizens blocked
The payment of 15 per cent interest rate for senior citizens above 55 years of age for their deposits in Licensed Finance Companies is unlikely to get off the ground due to financial implications relating to the relevant 2016 budget proposal, official sources said. Certain negative affects in the implementation of the proposal were highlighted at a meeting of Treasury and the Central Bank high officials held recently, a senior CB official said adding that no final decision was taken on this matter.
So far no instructions have been issued despite assurances by the Treasury Secretary and the Central Bank Governor. Although the Treasury has prepared the operational instructions and made other necessary arrangements, it has not received a directive from the top to go ahead with the 2016 budget proposal. To go ahead with the proposal, the Treasury will have to allocate Rs.1.5 billion for the interest subsidy of 1.5 per cent to finance companies to grant this facility applicable for deposits up to Rs.1.5 million of elderly citizens above 55 years of age.
While the modalities of providing this facility for finance companies are yet to be finalised and unlikely in the current cash-strapped environment, some Treasury top brass are not in favour of doling out public money to finance companies, informed sources said. In the absence of clear instructions, commercial banks have this year, renewed deposits of senior citizens’ accounts that were placed at 15 per cent interest under earlier budget proposals.