Lending rates of banks and financial institutions have been declining rapidly in line with government policy. This is explained as needed for accelerating economic development of Sri Lanka. Unfortunately this results in declining incomes of fixed deposit holders of financial institutions.
While adjusting lending rates is done in the larger interests of the economy of the country, this must be done in such a way that it would not adversely affect a segment of the population who are struggling to survive because of increasing cost of living and exorbitant medical bills.
Retired Provident Fund (EPF) holders who live precariously on the meagre income derived from their funds held in fixed deposits are a group of persons especially vulnerable in this situation. They come from many walks of life. Majority of them were employees of the private sector but there is also a large number of retired public sector employees employed by the banks, state corporations, the universities and many similar institutions.
Declining interest rates would make their plight unbearable and eventually create a ‘poverty group’ who will have nothing to fall back on and will need government assistance to survive. A special scheme, a special interest rate for senior citizens for example, to assist them has to be considered by the government before the situation becomes unbearable. The present 1% of additional interest paid by financial institutions is hardly a meaningful solution because it does not compensate for the almost 10% loss of interest seen in the last few months.
I hope this letter will create some awareness among the financial authorities and the government concerning the plight of senior citizens and consider the need to address the problem meaningfully. I also hope that those who are affected and those who are likely to be affected in the near future would think of what they could do under the circumstances.
Provident Fund holder,