Posted on 09.11.2018 by Chandana Sirimalwatte in Local News with 0 Comments
It has been revealed that state banks are at great risk owing the government plan to earn cheap popularity through pumping treasury funds for higher interest rates on Senior Citizens’ Fixed Deposits.
The Government through its 2015 budget mandated commercial banks to grant a special interest rate of 15% for senior citizens’ fixed deposits up to Rs 1 million. To keep the government’s promises, the treasury was given responsibility to pay 15% interest rates to the FDs worth of 1 million for senior citizens in nominated banks.
In 2017, the Finance Ministry increased the upper limit of the fixed deposit to Rs 1.5 million but the interest rate remained at 15%. The number of fixed deposits by senior citizens increased after the introduction of the attractive interest scheme fulfilling government imagination for popular support. The banks which held FDs of the hopeful senior citizens have paid interests for their deposits whereas, these banks are entitled the amounts from treasury.
According to the calculations so far, the Treasury has to pay 22.92 billion rupees for commercial banks, it is reported. A sum of Rs. 13.462 billion has to be paid to banks for the year 2017, but not been paid a cent. For the first quarter of this year, Rs. 3.304 Billion has not been paid. It was only Rs. 6.156 billion paid out of 14.518 billion rupees in 2016. Further, the full amount was paid to these senior citizens only in 2015, and then the payments are partial and later abandoned. Up to now, however, the Treasury has paid Rs 11.723 billion to banks out of the Rs 34.646 billion owed in total since 2015.
The total amount of higher lending interest the is 34,646 billion rupees for the higher interest rates and only managed to pay Rs. 11,723 billion, the Central Bank sources reveal.