According to an SBI study, their share in fixed deposits has doubled to 30% from 15%. To provide financial independence to senior citizens, the report recommends that govt should waive tax on interest on these deposits and double the Atal Pension Yojana ceiling to Rs 10,000.
The report highlights that while bank credit grew by 20.2% in FY24, aggregate deposits grew by 13.5% during the same period. “With the rising demand for credit, amid tight liquidity conditions, banks have raised their deposits rate in H2 FY24, in order to raise fresh deposits, despite RBI holding the rate since Feb 2023,” the report said.
The report by Soumya Kanti Ghosh, chief economist at SBI, reveals that there are now 7.4 crore senior citizen FDs with deposits worth Rs 34 lakh crore. This is a sharp 81% increase from the 4.1 crore accounts in FY19 and a 150% increase in the value of deposits from Rs 14 lakh crore.
“Govt has deftly ensured superior interest offerings through specialised schemes like the senior citizen savings scheme and card rates of banks having 50-75 bps markup for this segment,” the report said. It added that an increase in the tax deduction threshold at source on deposits for senior citizens to Rs 50,000 provides an additional that will boost income for them.
The report also reveals that the pass-through to term deposits on fresh and outstanding deposit rates was higher for PSBs than PVBs. With the rise in deposit rates of term deposits, the incremental share of FDs has increased to 93% (estimated) and CASA share has declined to 7% in FY24.