NSB should consider permanent FD rate for senior citizens
View(s):By Percy Thenuwara
Almost a decade has passed since Parliament adopted the ‘Protection of the Rights of the Elders Law No. 9’ in 2000 and established the National Council for Elders in June 2002.
However the elderly in Sri Lanka neither get no respect nor facilities similar to that extended to the elderly in other countries. Thus it is time to think seriously about the elders of our country and their problems as the ageing population here is growing fast.
Over 10 per cent or 2 million people in Sri Lanka are considered as elders with the country having the third largest elderly population in Asia after Japan and Singapore, and is one of the fastest growing in the world.
This population in Sri Lanka is estimated to double within the next decade to around 20 per cent or 1/5th of our total population.
Thus a well-thought out long term policy has to be made for the wellbeing of our elders by any forward thinking government.
The National Savings Bank (NSB) can play a leading role in contributing towards the formulation of such a policy as the custodian of most of the savings of elders.
We need to initially address the most pressing need of our elders who have on their own saved small amounts from their hard earned incomes and whenever and wherever possible deposited them in Fixed Deposits at the NSB expecting to make use of such savings on their retirement.
However without a fixed rate of interest being applicable over longer periods and so much inconsistency in the interest rates which are subjected to frequent changes, how can the innocent depositors be guaranteed a fixed income coming back to them on their own moneys deposited as FD’s?
We know that according to Government policy changes the NSB too has to fall in line and sometimes has to reduce its interest rates from a high of around 16 per cent to a low of around 8 per cent. Just imagine a person who had planned for a fixed return of around Rs.20,000 per month just for his existence being forced to exist on half of that income or only Rs.10,000 monthly? It is true that a country has to keep on changing its interest rates due to the fluctuations in the economy from time to time. It is also true that a country has to look after the welfare of its people and especially those who had toiled during their heyday to support governments to run the country. These people have only extended that support further to the state even after retirement by depositing their savings in a state bank.
We all know how banks earn profits through such deposits and how little of that profit goes back to the depositors as a return on their investment. Even this little return becomes a negligible amount if one considers the rising prices, inflation and inconsistent interest rate fluctuations. Shouldn’t the NSB protect the rights of the elders?
My suggestion is to conduct a sample survey and find out whether the NSB could consider a fixed rate of interest initially to at least a small group of senior citizens based on their age and loyalty with the bank as a guaranteed return on their investments made with the NSB.
From such a survey you can find out how much contribution comes from the deposits of senior citizens and they can be classified according to age groups. I believe now the NSB considers 55 years and above as senior citizens. This sample survey should bring out the number of senior citizens now with the NSB so that at any given moment the bank should be able to state how many of their depositors fall into the 55 – 65 age group and between 65 – 70 age group, etc. So if the number between 55 – 65 is too large to consider as a sample exercise then the bank can start with a smaller group of either 65 – 70 or 70 – 75 age group initially for the sample exercise. If the scheme proves to be a success and brings in more and more deposits (today banks can target to attract the children of these senior citizens also to contribute to this scheme by launching effective savings campaigns) it can be introduced to cover the other age groups as well in several stages and all the senior citizens/depositors later on.
The bank could decide on different rates of interest for different age groups and introduce some special rates of interest for the savings deposits of those who had been depositing for long periods.
The proposed strategy here is to ensure that those senior citizens will get a fixed return on their investments from the time of the deposit of the FD for their lifetime.
I am indeed happy to mention that NSB has already taken a lead role in forming Senior Citizens Committees within the depositors of their branches and assist them to organize welfare activities for their wellbeing, even making significant contributions for their successful operations.
However such gatherings of senior citizens may require voluntary contributions also from its members in order to continue their good work without becoming a burden to NSB.
As a member of such a Senior Citizens Committee at the Kirulapona branch of the NSB, I am confident that with some new thinking and introduction of innovative initiatives the NSB could go a long way in playing a more proactive lead role for the benefit of senior citizens.
I trust this proposal would receive some consideration from appropriate authorities in the NSB and the Government.
(The writer is a senior citizen and can be reached at perthenu79@gmail.com)
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