|
|
Gov’t To Launch Savings Scheme For Elderly On Aug 1
India Daily
India
July 14, 2004
The government said on Wednesday it will launch a new savings scheme for senior citizens which offers a 9 percent interest rate on August 1. A finance ministry statement said the five-year scheme would be available to people above 60 years and would have a ceiling of 1.5 million rupees. The scheme, which is taxable, will have a facility for premature withdrawal subject to certain conditions. The statement said existing small savings schemes would continue to be sold through post offices and not through banks. Finance Minister Palaniappan Chidambaram had announced in his federal budget speech last week the government would offer a new savings scheme for senior citizens. The minister had left rates on government-administered small savings schemes -- popular with pensioners and the salaried -- unchanged in his budget. India cut rates on government-administered small savings schemes -- popular with pensioners and the salaried for their high returns -- by 100 basis points last year in an effort to align them with interest rates on bank deposits. The higher rates on these small savings schemes distort the overall rate structure as banks have to compete with these schemes while attracting depositors, leading to higher lending rates. Savers in these administered schemes get up to 9.5 percent, while government securities pay between 4.5-6.0 percent creating a distortion.
|
|
