The Government of India has asked the bankers of Public sector banks to ensure proper implementation of Pradhan Mantri Vaya Vandana Yojana, which has been extended up to 2023, under which the senior citizens will be provided 7.4% interest rates on their deposits.
The government is also pushing the Public sector banks to provide loan at 7.5% under the loan guarantee scheme to the small businesses that ensures to provide up to Rs. 3 lakh crores.
The Reserve Bank of India has been repeatedly reducing the rates amidst the ongoing lockdown.
In response, the State Bank of India has also reduced its peak fixed deposit rate to 5.7% for funds of 5-10years. For senior citizens, the interest rate stands at 6.5% per annum.
Currently, small businesses are borrowing at 11-12% from state-run lenders.
The businesses with a turnover of up to Rs 100 crore and outstanding loans up to Rs 25 crore will also receive ana additional working capital of 20% through government guarantee at 9.25%.
The RBI wants the banks to lend at 7.5% rate which may not be possible for all the banks. But, the banks are required to work for an indicative rate that can be at par with RBI’s regulated rate.