This refers to the report “Short-term rates at 2-year high” (October 29). Interest rates on bank deposits as well as loans have often been impacted by cyclical changes over a five-year period. Constant or near-constant rates are possible only in economic theory. However, senior citizens who do not get any pension and depend exclusively on interest earnings on bank fixed deposits are the most worried because of the cyclical nature of interest rates. I have come across senior citizens who fear and actually experience an erosion of their saving capital when the downward phase extends to a period over 18 to 24 months as happened after April-May 2009.
The Senior Citizens’ Deposit (SCD) scheme, which gives a 9 per cent interest, is a good scheme but since the lock-in period is five years, many senior citizens cannot put aside that amount of money. My suggestion is: take away the 80C benefit of the SCD scheme but reduce the holding period to three years.
Narendra M Apte, Pune
