EconomyNext – Sri Lanka’s government will issue a bond to banks at an annual tax-free interest of 12 percent to cover extra interest cost incurred by them under a state-mandated special deposit scheme to pay higher interest income for senior citizens.
The Central Bank said the Special Interest Scheme for Senior Citizens over 60 years of age will come into effect from 1 January, 2015.
The scheme to give a 12 percent special annual interest rate scheme for deposits of citizens over 60 years of age who maintain the fixed deposits in all licensed banks was proposed in the government 2015 budget.
"All deposit holders above 60 years of age and holding rupee fixed deposits totalling up to 2,500,000 rupees in licensed banks will be eligible to receive an annual interest income of up to a maximum of 300,000 rupees," a statement said.
"The private banks that participate in the proposed scheme will be expected to actively participate in financing government development activities, in consultation with the Department of Development Finance of the Ministry of Finance."
It said the participating banks will in turn receive a special bond to be issued by the government at an interest of 12 percent a year to cover the additional interest cost incurred by them under the scheme.