Exponential Growth in Senior Deposits
The report estimate suggests that there are around 74 million senior citizens term deposits accounts in the country with total deposit of Rs 34 lakh crore. Out of such 74 million accounts, almost 73 million accounts are in the size of up to Rs 15 lakh. By assuming 7.5% interest on Sr citizen bank deposits, Rs 2.6 lakh crore is the interest earned.
In 2018, SBI had estimated that there are around 41 million senior citizens term deposits accounts in the country with total deposit of Rs 14 lakh crore. So, in 6 years, there has been an increase of 81% growth in number of accounts and 150% in amounts.
“Interestingly, these 74 million accounts is a significant jump from that in FY19, when we had estimated that there were around 41 million senior citizens term deposits accounts in the country with total deposit of Rs 14 lakh crores. So, in a short span of 5 years, there has been an increase of 81% growth in number of accounts and 143% in amount in this cohort! The average balance in the accounts has grown handsomely by 38.7%, to Rs 4.6 lakh cr from earlier Rs 3.3 lakh crore, ” said Dr. Soumya Kanti Ghosh, Group Chief Economic Adviser State Bank of India.
The Government of India’s Senior Citizen Savings Scheme (SCSS) has emerged as a cornerstone of this financial upswing. Launched to safeguard senior income, SCSS allows deposits up to Rs 30 lakh with a guaranteed 5-year tenure and an attractive 8.2% interest rate. This, coupled with tax benefits and a secure investment environment, has proven immensely popular. The report reveals that SCSS outstanding deposits in H1 FY24 stand at Rs 1.62 lakh crore, a significant 89% increase since FY14.
Banks Sweeten the Deal with Special Senior Citizen Offerings
Commercial banks are also vying for a share of the senior savings pie by offering competitive rates. Many banks provide a 50 basis point (bps) premium over the standard card rate for senior citizens. Additionally, leading banks like SBI and HDFC have introduced special fixed deposit schemes with tenures tailored for seniors and interest rates 75 bps higher than regular rates. These initiatives, along with SBI Green Rupee Term Deposit’s additional 100 bps for green initiatives, further incentivize senior savings.
The Power of Compounding: A Windfall of Interest Income
Atal Pension Yojana: Building a Secure Future
The government’s Atal Pension Yojana (APY) is another key player in empowering senior citizens. Launched in 2015, APY aims to create a universal social security system, particularly for the underprivileged and unorganized sector workers. As of February 2024, the scheme boasts 5.46 crore subscribers and an impressive Rs 34,781 crore in assets under management (AUM). While the current scheme offers a maximum pension of Rs 5,000 per month, the report proposes raising this limit to Rs 10,000 to further enhance senior financial security.
First Published: Apr 16 2024 | 12:27 PM IST