Help them out | Daily News

Help them out

Central Bank Governor Prof. W.D. Lakshman is going to be the toast of all persons running Fixed Deposit accounts in both State and private Banks who have seen their interests on deposits shrink appreciably placing them in financial dire straits.

He will definitely be lauded by pensioners and senior citizens who are solely dependent on the Bank interest for survival in their old age after having deposited their retirement benefits in Banks expecting a steady monthly income.

Speaking at a Central Bank forum on Monday, Prof. Lakshman lamented the plight of fixed income earners, particularly senior citizens dependent on retirement pensions, who have had to forego a sizeable portion of their income derived from deposit interest from Banks due to the prevailing low interest rates.

He called for the improvement in the Capital Markets of the country to introduce alternative, novel, safe and attractive financial products, particularly for savers who face low deposit rates.

The low interest regime could not have come at a worse time for the senior citizens who have been dealt a double blow, having had their interest drastically slashed on the one side and also having to cope with the increase in the price of medicine and other nutritional needs needed to sustain them in their old age, chiefly due to the blow to the economy brought about by the Coronavirus.

Readers’ columns in daily newspapers are full of the woes of senior citizens who solely depend on the Bank interest derived from depositing their lump sum payments received upon retirement, to purchase their pressing requirements.

One retiree complained how he has had his interest amounting to 65,000 per month suddenly reduced to less than Rs. 50,000 – a drop of Rs. 15,000 which is a substantial portion of his monthly income. Whether this retiree will be able to afford the full quota of his drugs and nutritional needs while still enjoying his accustomed lifestyle will be anybody’s guess. This is only a microcosm of the difficulties of pensioners and senior citizens depending on their Bank interests are pushed into as a result of the substantial drop in the interest rates.

The exclusive 15 percent interest rate granted to senior citizens subject to a Rs. 1.5 million deposit ceiling granted as a sort of windfall to this segment, obviously to cushion the impact of the Cost of Living on them, will now be rendered redundant, with the bulk portion of their regular interest swallowed up by the Banks.

The Government should think of viable solutions to alleviate the plight of this vulnerable segment of society who had given the best years of their lives in some form of service to the State and are now anticipating a well-earned rest. One should also not lose sight of the fact that not all retires from the private sector were drawing princely salaries and therefore their EPF/ETF benefits are essentially tailored to their meagre emoluments.

Perhaps it is with this factor in mind that the special interest rate for Rs. 1.5 million was granted. The slashing of the regular deposit interests will now place them in a dire predicament.

The Government should throw in a safety net to these souls who have now fallen from the frying pan to the fire amidst the Corona crisis. It ought to ensure that our senior citizens enjoy a comfortable life as far as possible without being a burden to anyone by providing them with the resources to stand on their feet like in some of the advanced Western countries where the elders are looked after well and live independently.

True, banks have to follow protocol and walk a tightrope and are subject to the strictures and guidelines of the Central Bank on how they invest their money. Even in the granting of higher interest rates they are governed by the fiscal guidelines of the Central Bank, particularly so in the current circumstances after the serial collapse of finance companies.

Equally it is also true that Banks today earn good profits and one has only to open the Business Pages of the newspapers to observe the boastful claims and the proclamations made by the Banks as to their profit achievements, declaration of additional dividends to shareholders, entering into fresh mergers with other commercial ventures, etc., to leave no one in doubt as to their viability and financial stability.

It is also true that banks were instructed by President Gotabaya Rajapaksa to reduce lending rates and relax lending conditions to businesses, particularly Small and Medium Scale Enterprises (SMEs), during the first wave of the Coronavirus. As a result, banks may also have been constrained to make up elsewhere for the deficit and the fixed deposit holders could have become an obvious casualty.

Senior citizens deserve to be treated with compassion and their laments and pleas be given a sympathetic ear by the President for whose victory, the contribution made by the pensioners and senior citizens was certainly not inconsiderable.