State Minister of Finance Shehan Semasinghe said that the interest rates given to senior citizens’ fixed deposits (FDs) would not be increased soon until the existing amount of Rs. 108 billion owed to the banking sector is settled.
In 2022, the respective interest scheme was temporarily terminated in the wake of adjusted policy rates and record high rates for Treasury bonds. Senior citizens’ FD accounts that fall under the special high interest rate scheme previously received an interest rate of 15%. If they were converted into a normal FD account, they could, at the time, get an interest rate of 14.5%, according to the policies.
When contacted by The Daily Morning yesterday (22), Semasinghe said that President Ranil Wickremesinghe, in his capacity as the Minister of Finance, Economic Stabilisation, and National Policies, has been instructed to phase out the total overdue and to settle it before increasing the interest rates. He also noted that the Government does not have the required fiscal space to find the necessary funds to increase interest rates. Semasinghe also noted that the Finance Ministry is currently working to regulate and streamline the particular accounts through a committee appointed by the President.
He also said that this issue is completely misinterpreted by political parties for their personal benefit instead of appreciating the Government's commitment to stabilise the country’s banking sector, which was collapsing during the economic crisis.
It is reported that the Treasury owes Rs. 108 billion to the banking sector for the higher interest rates provided for the senior citizen deposits which are currently terminated due to the economic crisis. Speaking in the Parliament recently, State Minister of Finance Ranjith Siyambalapitiya said that the Treasury needs to reimburse the banking sector Rs. 108 billion for the higher interest rates provided for the senior citizen deposits taken before the termination of the scheme in 2022. Responding to a request by the Leader of the Opposition Sajith Premadasa to recommence the scheme, Siyambalapitiya said that under the current situation, to provide a 15% interest rate for the deposits of senior citizens above the age of 60-years, the Treasury needs to pay at least Rs. 80 billion annually to the banks.
Several attempts made to contact the Treasury and Finance Ministry Secretary Mahinda Siriwardana to obtain details of the report of the committee appointed to look into the matter proved futile.