Senior Citizen Term Deposits Near Rs 34 Lakh Crore In FY24, SBI Study Reveals

The study found that nearly 73 million accounts out of the total 74 million included deposits of up to Rs 15 lakh, and the interest earned on the deposits stood around Rs 2.6 lakh crore

More and more senior citizens are securing their savings at higher interest rates in anticipation of a rate cut by the Reserve Bank of India

Senior citizen term deposits have become increasingly popular in the last five years, a research report by the State Bank of India revealed. The study said that the contribution for the deposits has doubled in recent years to touch 30 per cent in the 2023-24 fiscal year (FY24) and stands at Rs 34 lakh crore. 

More and more senior citizens are securing their savings at higher interest rates in anticipation of a rate cut by the Reserve Bank of India, reported Business Standard citing the study. The data revealed that there are 74 million senior citizen term deposit accounts in India today with a cumulative value of Rs 34 lakh crore. 

The figures represent a 81 per cent jump in account numbers and a major 150 per cent increase in overall deposits against 2018. As of 2018, 41 million senior citizen term deposit accounts existed in the country with a value of Rs 14 lakh crore. Dr Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI, noted, “The average balance in the accounts has grown handsomely by 38.7 per cent, to Rs 4.6 lakh crore from earlier Rs 3.3 lakh crore.”

The report found, “The increased in deposit rates, the higher interest rate differential for senior citizens and the special deposit schemes for senior citizens (for example WE-CARE by SBI) has propelled a tectonic shift in deposits accretion for citizens ably supported by also Government initiatives on SCSS, Mahila Samman Savings Certificate and so on.”

The study found that nearly 73 million accounts out of the total 74 million included deposits of up to Rs 15 lakh. With an estimated interest rate of 7.5 per cent on senior citizen bank deposits, the interest earned on the deposits stood around Rs 2.6 lakh crore.

The report estimated that at a 10 per cent tax rate on income, the government stands to gain a decent amount of money in taxes. "It will be fair if such amount is given full tax rebate as the revenue foregone by the Government will not have impact on Government fiscal deficit," the study added.