The budget proposal to pay 15 per cent special interest on fixed deposits of up to Rs 1.5 million held by senior citizens in commercial and specialized banks is being finally enforced, it was announced on Wednesday. Earlier the limit was up to Rs 1 million. The Business Times was in the forefront of the campaign urging the government to enforce this proposal first proposed in Budget 2015.The new rule takes effect from March 1. On the instruction of the Finance Minister Ravi Karunanayake, Treasury Secretary Dr. R.H.S. Samaratunga has informed the Central Bank to notify all banks amending the previous circular in this regard.
The special interest scheme applies to those who are 60 years and above. Under this scheme the government pays the difference between the 15 per cent and the market standard interest rate offered by commercial banks. The Treasury had allocated Rs.13 billion for this purpose in 2016 for these scheme which offered 15 per cent to deposits of up to Rs 1 million.
“As a result of this offer to senior citizens, the number of fixed deposits by senior citizens rose to 450,000 in 2016 from 91,000 in 2015,” the ministry said in a statement.