Interest Rate on Fixed Deposit
The rate of interest on fixed deposits by senior citizens given by nationalized banks differs from bank to bank. The Reserve Bank of India (RBI) has deregulated the interest rates on term deposits with effect from October 22, 1997. Accordingly, banks are now free to fix the interest rates on term deposits subject to the approval of their respective Boards. Further, banks have been permitted to formulate, with the approval of their Boards of Directors, fixed deposit schemes specifically for resident Indian senior citizens, offering higher and fixed rates of interest as compared to normal deposits of any size. This additional interest rate is not applicable to any type of non-resident deposits.
Following the reduction in the policy rate by 50 bps in two equal steps on January 15 and March 4, 2015, out of a total of 27 Public Sector Banks (PSBs), 14 PSBs have reduced their median term deposit rates across maturities in the range of 0.07% to 0.75% so far (up to April 15, 2015).
The median term deposit rate for SBI was reduced from 7.50 per cent in August 2014 to 7.25 per cent in September, 2014. It remained unchanged at 7.25% thereafter.
Launch of Pradhan Mantri Suraksha Bima Yojana and Pradhan Mantri Jeevan Jyoti Bima Yojana
The Finance Minister in his Budget Speech 2015-16, announced two Social Security Schemes in the Insurance Sector, namely the Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY).
The Pradhan Mantri Suraksha Bima Yojana will be a one year accident insurance cover for Rs. two lakhs, renewable from year to year. Under the scheme, accidental death and disability cover of Rs. two lakhs is offered on account of an accident to all saving bank account holders in the age groups of 18 to 70 years for a premium of Rs. 12/- per annum per member. The scheme would be offered/administered through Public Sector General Insurance Companies (PSGICs) and other General Insurance Companies willing to offer the product on similar terms with necessary approvals and tie up with Banks for this purpose.
The Pradhan Mantri Jeevan Jyoti Bima Yojana will be one year life cover, renewable from year to year. Under this scheme, life insurance cover of Rs. two lakhs for death due to any reason is offered to all saving bank account holders in the age group of 18 to 50 years for a premium of Rs. 330/- per annum per member. The scheme would be offered/administered through LIC and other Life Insurance companies willing to offer the product on similar terms with necessary approvals and tie ups with Banks for this purpose.
The said schemes are being launched very soon. Premium under both these schemes will be paid by the subscribers and no subsidy has been sought on the premium by the Insurance Companies.