Being a senior citizen has its advantages. Banks (private as well as
public banks) are giving special privileges to the senior citizens as
traditionally banks offered them 0.25-0.5% higher rates on fixed deposits
compared with that to ordinary investors. But now few banks are
offering senior citizens almost 1% more! The reason being senior
citizens usually have a bulk of their investments in fixed deposits,
thus making them prized customers for banks.
Axis Bank
spokesperson says, “Senior citizens have traditionally been the most
active investors in fixed deposits. So, the banking industry has always
focused on generating deposits from them”. Axis offers an interest rate
of 10.25% on deposits of 15-18 months to those above 60 years whereas
other earn 9.25%.
Even public sector banks are offering higher rates on FDs to senior citizen. Due to competition from private banks they are also offering competitive rates.
The higher rates coincide with the lowering of age limit for the
senior citizen category of taxpayers in this year’s budget. From 1st
April, anybody above 60 years will be considered a senior citizen for
tax purposes instead of 65 years earlier. The tax exemption for this
category is 2.5 lakh. The budget has also introduced a new category of
very senior citizens, those above 80 years. The tax exemption for them
is 5 lakh a year.