Senior citizens cry foul over falling bank interest rates

The logic of lowering interest on deposits is to encourage lending and investment. But it also depresses demand. And senior citizens are urging the Government to maintain, if not increase, interest rates so as to give a fillip to demand.

The steady reduction in interest rates on bank deposits coupled with escalating prices of goods and services has alarmed senior citizens with small savings.

“The government had started a scheme for deposits of senior citizens and the rate was 9.20 per cent but In July 2014 it was reduced to 8.3 per cent; the amount limited to ₹15 lakhs. This is totally unjustified. The rate should be a minimum of 12 per cent and the amount limit should be equal to what a person gets as terminal benefits,” reads a letter by one of them addressed to the Finance Minister.

Besides several open letters addressed to the Central government circulating on social media, several senior citizens have taken to Change.org—an online platform for petitions—to voice their growing concern over falling deposit rates over the past three years. The pace of decreasing deposit rates has been described by the experts as the “fastest” in the last decade-and-a-half.

“Senior citizens are hard hit because of decreasing bank rates. Please increase the additional interest on senior citizen Fixed Deposits to 2.5 per cent (2 per cent in addition to the present 0.5 per cent). The burden of this additional 2 per cent interest should be shared equally by banks and Government of India (GOI) subject to a maximum of ₹20000 from each (bank and GOI) per senior depositor. Even after these limits are exhausted banks should continue to provide 0.5 additional interest on all deposits by seniors,” reads a petition filed on Change.org, addressed to Finance Minister Arun Jaitley.

It also demands: “Increase the exemption limit for income tax for 60 plus citizens to 6 lakhs and 80 plus citizens to 8 lakhs. Increase the 80c limit for senior citizens to 5 lakhs. The FD and SB interest earned by senior citizens should be exempt from tax up to one lakh.”

A senior citizen Dharam Pal Bhateja—who is a retired banker and a Chandigarh resident, in an open letter jointly addressed to Prime Minister Narendra Modi and Finance Minister Arun Jaitley slams the government.

“…Your government after taking over in 2014 has done nothing for senior citizens. No additional facilities extended but withdrew what existed in 2014. But no commodity is available at the price prevailing in 2014,” the letter reads.

“On August 1, 2012, I put ₹40 lakhs in a nationalised bank for 5 years. I was being paid an amount of ₹35,352 every month (of course subject to income tax) enabling me to lead a worry-free life financially. Now on maturity I have reinvested the amount in the same bank and I am being offered ₹26,489. It’s a shortfall of ₹ 8863 which means 25 per cent over the previous return, per month.”

“Can you please advise me from where I should make good the loss or sacrifice consumption of medicines or food-items?” Bhateja says in his letter, and reminds the government that “Yes you have been able to bring down the figures of inflation and indices but not the actual prices.”

“I am at a loss to understand from where this deficit of 25 per cent be met. Is any of the ministers and legislators ready to cut his salary and allowances by this percentage? If not, then why the public especially the senior citizens?” he questions, wondering if it is not the duty of the government to enable the senior citizens to lead a respectable life who have spent their golden years in serving the country in different capacities.

Bhateja regretted that when it comes to hiking their own salaries, allowances and perks, the legislators get it done at their sweet will, overlooking the additional burden on exchequer and other economic factors.

Here’s a collection of online reactions by social media savvy senior citizens: