Senior citizens confused over new FDs

By Lalin Fernandopulle

Senior citizens have fallen from the frying pan to the fire with confusion being confounded and the delay in implementing the 15 percent interest rate scheme for senior citizens pledged by the Government through its interim Budget.

The Government pledged a 15 percent interest rate on Fixed Deposits (FDs) below Rs. 1 million deposited before January 31, 2015 for senior citizens over 60. The confusion has arisen regarding the eligibility for the interest rate scheme as there is no clarity and uniformity in implementing the program. Opinion varies from bank to bank, adding to the confusion. Account holders said that banks give various views as there is no clear direction from the regulator on passing the long-awaited relief to senior citizens who are left with a pittance after paying their medical bills.

Central Bank Deputy Governor D B W A Silva said that the Central Bank had issued clear directions to all banks on the interest rate. Senior citizens said that banks are either reluctant to pass on the benefit or have not received clear directions from the authorities.

Commercial Bank Managing Director Jegan Durairatnam said that the bank had received directions from the Central Bank on implementing the new interest rate for senior citizens.

“According to the directive senior citizens above 60 with an FD account below Rs. 1 million deposited before January 31, 2015 are eligible to receive the higher interest rate.

FD account holders who enjoyed the 12 percent interest rate for amounts below Rs. 1 million, deposited before January 31, 2015 could convert the account to the 15 percent interest scheme," he said.

Those with an FD above Rs. 1 million are not eligible for the new scheme. A Bank of Ceylon branch manager in Colombo said that according to the circular of the Central Bank, FD account holders with less than Rs. 1 million deposited before January 31, 2015 are eligible for the 15 percent interest.

He said that a senior citizen could have only one FD account to receive the 15 percent interest rate.

There cannot be multiple FD accounts. Pensioners said that the paltry pension they get is hardly enough to make ends meet. Added to this burden is the soaring cost of living which has left them with a Hobsons choice, to either go for medicine or have food on their table.

Many of the pensioners and senior citizens who do not receive a pension are at the mercy of their children. Neville Fernando, a pensioner in Hendala said that those with an FD above Rs. 1 million are not entitled to the higher interest rate. Citing an advertisement of the Sri Lanka Banks’ Association (Guarantee) Limited in the newspapers of March 2, he said the new interest rate is also not applicable for balances in accounts other than in FD accounts. The advertisement stated that balances in savings accounts or any other accounts other than FD accounts will not be eligible for the higher interest rate. It also stated that those opting for monthly interest will get 14.06 percent.

“There should be flexibility and options for senior citizens who have made an immense contribution to the country.

Senior citizens are ignored once they reach retirement age forgetting the contribution they made to the country,” Fernando said.

There is also confusion on whether the State and private banks apply the same conditions. Account holders said that certain bank officials are not clear about the conditions and are vague in their opinions. A State bank official said that according to the Central Bank directive those who are eligible for the 15 percent interest rate are those who had maintained a FD with the 12 percent interest rate between January 1 and 31, 2015. He said that FD account holders within the stipulated period would be eligible for the new interest rate by meeting the necessary balance even after January 31. The former government granted a 12 percent interest rate per annum for deposits up to Rs 2.5 million for citizens over 60.

Ananda Perera, a senior citizen with no proper income said that the authorities have been dilly dallying on implementing the scheme which would ease the burden of senior citizens most of whom lead a hand to mouth existence due to the staggering cost of living.