9% senior citizen plan rollout to be via banks in Nov

The Centre will roll out the Senior Citizens' Savings Scheme offering a nine per cent return in November through banks.

According to banking sources, 23 banks have been designated by the Reserve Bank of India (RBI) to distribute the taxable bonds. Earlier the scheme was proposed to be distributed through the postal department.

While the National Small Savings organisation will be the nodal authority for the scheme, RBI will be responsible for managing banks involved in the distribution. The scheme has a cap of Rs 15 lakh per investor. It will be available for those who are 60 years of age and above.

The nine per cent interest makes the scheme the highest paying instrument in the market. In August, the government had slashed the interest rate on the employees' provident fund to 8.5 per cent from 9.5 per cent. It had also withdrawn the tax-free RBI Relief bonds offering a six per cent rate which was equivalent to an earning of almost 10-11 per cent.

The scheme was announced in the Budget 2004-05 in order to provide an option for senior citizens to protect their income against falling interest rates. Market dealers feel with the rising inflation the instrument might fail to find takers.