Government withdraws bonus interest given to senior citizens

Bookmark Government withdraws bonus interest given to senior citizens

Hundreds of Sri Lanka’s senior citizens are in a quandary after they were encouraged by the Central Bank to place their monies in commercial banks with the promise of a 20 percent bonus on interest. Six months later, the Central Bank has now told the commercial banks that the bonus scheme is being suspended in view of the large sums of money involved.

Many of the senior citizens had withdrawn their savings from finance companies and deposited them in the state and private banks as interest on deposits had fallen from 14-18% to 8-9% in the past three years.

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.

“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.

Commercial bank officials said the scheme was withdrawn because of limited state funds.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.

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