Senior Citizens Bonus interest cut

Government of Srilanka said senior citizens receive 20% but now its questionable, yes Srilanka Central Bank indicates negative points so thats scheme continuous as suspend.   

Six months later scheme reviews due to many of the senior citizens bonus issues increases in big percentage, Central bank indicate many senior citizen withdral of money from private banks and financial companies and deposit in state banks for two reasons,

1. Public persons have one of the affection in private sector lost

2.State banks interest higher than private sector. So State private sector investment increase  

Under this scheme, the government directed that a 20% bonus interest be given from January to citizens over 60 years on rupee deposits in licensed banks. On June 30, a circular was issued to commercial banks by the Central Bank suspending the scheme.

The bonus interest scheme was initially for three months (to March) and then extended for another three months, the official said. “When interest rates fell, elderly citizens complained to the government after which the bonus interest scheme was devised. However, inflation and the cost of living have come down and we believe such a bonus scheme is not necessary now,” he said.

“It was done on the instructions of the Government. We are just a facilitator in this scheme,” one senior Central Bank official said, explaining however that most schemes of this nature are short term, temporary and meant to meet a particular situation.

A similar suspension was made of another scheme where 20% bonus interest was paid on NRFC accounts. This was introduced in January 2009 to attract more foreign currency into the country, as Sri Lanka was short of foreign exchange. That bonus scheme ended in October 2009 after foreign currency reserves improved.

Commercial bank officials said the scheme was withdrawn because of limited state funds. Another aggrieved depositor said all their savings have gone into fixed deposits and they were dependant on interest income.

“When it falls we struggle to survive. We have bills to pay and often education expenses of our children,” she said. “The government needs to be a little more considerate.”

Economists said the social phenomenon of living on interest rates was not sustainable. “This has been a recent practice in the absence of proper pension and social security schemes but is unsustainable because interest rates fluctuate and what goes up will, eventually, come down,” one economist said to Sunday time.

The Central Bank official agreed that senior citizens were a vulnerable group and pointed that there were other measures by which they were offered some social protection. “All state banks have been instructed to come up with social security schemes because living on one’s interest rate is simply not sustainable. It’s okay when interest rates are high but what happens when the rates come down which is a natural market phenomenon?” he asked.