Jaitley defends SBI decision to cut interest rate of savings account

Finance Minister Arun Jaitley today defended the State Bank of India's decision to cut interest rate on saving accounts of less than Rs 1 crore, saying the move was in sync with reduction in lending rate.

Responding to a Zero Hour mention of the SBI's decision to cut interest rate on saving accounts with less than Rs 1 crore deposit to 3.5 per cent from 4 per cent, he said to protect the interests of senior citizens, the government has already floated a deposit scheme that guarantees 8-plus per cent interest rate.

High interest rate on savings and fix deposits was during a time when inflation was 10-11 per cent and sluggishness was setting in the economy. So when the lending rate came down, so did savings account, Jaitley said.

He said for senior citizens and retired persons, the government has bought a pension scheme that guarantees 8 per cent interest rate.

Prime Minister Narendra Modi had announced the Pradhan Mantri Vyaya Vandana Yojana (PMVYY) in December last year which was launched in May.

"The effective rate comes to 8.3 per cent," he said, adding that the scheme is managed by LIC.

To opposition demand for a discussion on sluggish in economy and job losses, he said all issues the opposition want can be discussed and debated if they allow the House to function from 11 AM to 6 PM every day.