Sri Lanka’s banks are still owed 88 billion rupees for interest subsidies paid to senior citizens in the past, according to State Minister for Finance Ranjith Siyambalapitiya. This disclosure comes as the cabinet of ministers approved a new interest subsidy scheme aimed at providing relief to senior citizens.
The newly approved scheme establishes a floor of 10 percent on deposits for individuals over the age of 60. State Minister Siyambalapitiya explained that President Ranil Wickremesinghe was sympathetic to the requests from senior citizens concerning their financial struggles.
“We are currently in the process of repaying the 88 billion rupees owed to banks from the previous subsidy scheme,” said Siyambalapitiya. “Despite these financial constraints, the President has proposed a new subsidy plan to the cabinet.”
Senior citizen interest subsidies were initially discontinued when interest rates were raised to address an economic crisis caused by central bank rate cuts and liquidity injections. The original subsidy scheme, introduced by the Rajapaksa administration and continued by subsequent governments, provided a 15 percent interest rate for senior citizens.
In April 2024, opposition leader Sajith Premadasa advocated for the restoration of the 15 percent interest rate, citing the current lower interest rates. Minister Siyambalapitiya estimated that reinstating the scheme at that rate would require 40 billion rupees.
The new subsidy plan will provide up to a 2 percent interest subsidy to ensure that senior citizens receive a 10 percent interest rate on deposits of one million rupees or less. The exact cost of implementing this new scheme has not yet been determined.