In order to protect senior citizens from any decline in interest rates, Prime Minister Narendra Modi today said they will get a fixed 8 per cent return on 10-year bank deposits of up to Rs 7.5 lakh.

Senior citizens (60 years and above) will get monthly interest under this scheme, Modi said in his address to the nation on the eve of New Year.

“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 Rs 7.5 lakh. The interest will be paid monthly,” Modi said.

Finance Minister Arun Jaitley termed it “great news” for senior citizens.

“Great news for senior citizens — assured return on fixed deposits,” Jaitley tweeted.

Currently, banks give senior citizens an additional interest of 0.50 per cent over the regular rates on fixed deposits.

Country’s largest lender SBI offers 7 per cent interest rate to senior citizens on fixed deposits of 5 to 10 years tenure.

Following the spurt in deposits after demonetisation, banks are expected to reduce interest rates which will have a bearing on depositors, especially senior citizens as they mainly depend on interest income.

Under the Senior Citizen Savings Scheme (SCSS) at Post Offices, interest at the rate of 8.5 per cent per annum is given on deposits of up to Rs 15 lakh with a maturity period of 5 years.