Bonanza from banks for senior citizens

Senior citizens will be rewarded with a 20 per cent bonus on interest paid on deposits with retrospective effect from January 1, 2010, Central Bank sources said.

Citizens above 60 years will be entitled to this scheme for rupee deposits in licensed banks.

Banking experts said rewarding senior citizens is a fine gesture but steps should also be taken to narrow the margin between lending and deposit interests rates in the banking sector, which is the highest in the region.

Central Bank sources said this is not an election ploy as queried by some depositors but a move to recognise the contribution made by senior citizens to the country.

Sources said steps would be taken to reduce interest rates on lending by banks which have failed to comply with the directive of the Government.

The bonus scheme applies to existing or new individual/joint deposit accounts of senior citizens or joint accounts with spouses, joint deposit accounts of senior citizens with individual/s below 60 years(other than the spouse) which have been in operation before 01.01.2010. The bonus will be paid over and above the special schemes, if any, offered by banks for senior citizens.

Banks have been advised to obtain a written undertaking from recipients of bonus interest that if any payment is made in excess of the eligible amount it will be recovered from the deposit account without prior notice. (LF)