Have you heard about the fixed deposit schemes? The fixed deposit is the scheme of investment that the banks provide to its customer. It is the scheme where you can deposit a certain amount of money for a fixed period of time with the bank and in return, the bank endows an interest rate on the amount deposited so that you get the total amount upon maturity.
For example, Rahul Gupta, a 70 years old retired employee had deposited the amount of ₹ 6,00,000 with the bank under the fixed deposit scheme for 10 years. The interest rate on the amount given by the bank was 7.20%. But suddenly due to the change in the economy, there was the heavy deposit of cash in the bank. And the interest rate given by the bank falls to 6.50%. The fall in the interest rate will adversely affect the investment of Mr. Gupta by reducing his overall earning.
| Principal amount (in ₹) | Rate of Interest | Period (in years) | Maturity Amount (in ₹) |
|---|---|---|---|
| 600000 | 0.072 | 10 | 1230010.83 |
| 600000 | 0.065 | 10 | 1147310.25 |
As you can see from the above, if we evaluate the overall maturity amount in both the cases we can see the stark difference. The difference in both the case is of an amount of ₹82,700.58. The surge in deposit has lead the banks to slash the rate of interest which has resulted in the loss of an amount of ₹82,700.58 in overall earning of Mr. Gupta.
But worry no more as the new scheme on the fixed deposit recently announced by PM Modi can be a good news if you are planning to invest your money in fixed deposit. On the eve of new year, PM Narendra Modi declared a new scheme for all the senior citizens on fixed deposits. He declared
We are initiating a scheme for senior citizens. Banks often reduce their deposit rates, when they receive a large volume of money. This should not adversely impact senior citizens. Under the scheme, senior citizens will receive a fixed interest rate of 8 per cent for a period of 10 years, on deposits up to 7.5 lakh rupees. The interest will be paid monthly.
The declaration is a sigh of relief for all the senior citizens who want to make an investment with the bank through fixed deposit. After the declaration, if the same amount of ₹ 6,00,000 is deposited for 10 years then the new interest rate is 8%. The table below shows the total amount Rahul Gupta will get according to the new scheme-
| Principal amount (in ₹) | Rate of interest | Period (in years) | Maturity amount (in ₹) |
|---|---|---|---|
| 600000 | 8 | 10 | 1331784.14 |
Thus, you can see as mentioned above in the table the principal amount becomes more than double in 10 years time. The new scheme is beneficial for all the senior citizens who are trying to invest their money. It will give them high return, and is also one of the safe investment where no risk is involved. Only time will tell whether this decision to charge 8 per cent fixed interest rate on deposits for senior citizens is how much good for the mentioned class.
