Jaitley Defends SBI’s Rate Cut FM says interest on savings a/c reduced due to fall in lending rate but govt scheme will protect sr citizens’ earnings
New Delhi: Finance minister Arun Jaitley has defended top lender State Bank of India’s decision to cut interest rate on saving accounts of less than ₹ 1 crore, saying the move was in sync with reduction in lending rate. Responding to a Zero Hour mention of the SBI’s decision to cut interest rate on saving accounts with less than ₹ 1 crore deposit to 3.5% from 4% in the Rajya Sabha on Thursday, the finance minister said to protect the interests of senior citizens, the government has already floated a pension scheme that guarantees at least 8% interest rate. Prime Minister Narendra Modi had announced the Pradhan Mantri Vyaya Vandana Yojana (PMVYY) for senior citizens and retired persons in December last year, which was launched in May this year. “The effective rate comes to 8.3%,” Jaitley said. The scheme is managed by Life Insurance Corporation of India.
Jaitley said high interest rate on savings and fixed deposits was the norm during a time when inflation was 10-11% and sluggishness was setting in the economy. So, when the lending rate came down, so did (interest rate on) savings account, he said.
To Opposition’s demand for a discussion on the sluggishness in the economy and job losses, the finance minister said all issues can be discussed and debated if it allowed the House to function from 11 amto 6 pm every day.
Earlier, Derek O’Brien of Trinamool Congress raised the issue through a Zero Hour mention saying the SBI reasoned the decision (to reduce interest rate) to ₹ 1.5 lakh crore moving into the banking system after demonetisation of old ₹ 500 and ₹ 1,000 notes. There was no pick up in borrowing and economic activity was low, he said.
Stating that 90% of saving bank deposits are of less than ₹ 1 crore, the Trinamool MP said the move to cut interest rate has affected the small depositors, senior citizens and pensioners the most. The government, he charged, is not able to recover ₹ 7 lakh crore non-performing assets (NPAs) with big corporates and is hurting common people with such decisions.
Jaitley said the NPA issue can be discussed when a banking amendment bill comes up for debate in the House.
Arun Jaitley told Rajya Sabha that to protect the interests of senior citizens, the govt has already floated a pension scheme that guarantees at least 8% interest DIFFERENT TIMES