While term deposits have been the preferred source of savings for seniors, (as banks offer 0.5% more for senior citizens), there is a growing interest for other schemes as well.
"We have started giving special offers to senior citizens on products like demat accounts, online trading accounts, forex transactions and even on credit cards," says Anindya Mitra, senior vice-president (retail liabilities), HDFC Bank.
Illustration courtesy: rediff.com
He says seniors are aware of new investment opportunities and with private banks providing investment planning services, many elders are up to date on their portfolios. In the case of demand deposits, the share of senior citizens to the total customer base is approximately 10% which increases to 33% for fixed deposits, for HDFC Bank.
But they are not restricted to conservative instruments. Many wealthy seniors are opting for private banking services.
"They have a larger investible surplus. They want to grow their wealth and maybe even leave behind targeted sums to their successors even after maintaining their lifestyles," says K V S Manian, group head (retail liabilities) of Kotak Mahindra Bank. Such people end up allocating a portion of their assets to equities. "Many of them also do SIP (systematic investment planning) in mutual funds in favour of their children and grand children," says Manian. Around 12% of Kotak's customers comprise senior citizens.
The latest offering by banks for seniors is reverse mortgage. Reverse mortgage involves borrowers mortgaging their property to a lender who then makes periodic payments to the borrowers. But this feature hasn't found many takers as inheritance runs deep in the Indian blood.
Seniors are known for conservative asset allocation and this explains why FD (fixed deposits) perhaps still remains the first and in many cases, the preferred choice of investment. "Such term deposits help them manage their liquidity better. Many other financial instruments have a lock-in clause and therefore money can't be withdrawn in case of an exigency. But FDs allow for such break-ups," says Ananthakrishna, who recently retired as chairman of Karnataka Bank.
Some banks have launched saving account variants that are specifically targeted at the elders. Features include hospitalisation cover and lower balance requirements. Many nationalised banks have pensioners who have opened accounts with the bank.
"We offer demand loan products (loan against deposits) for senior citizens, " says Mathur Nanjunda of State Bank of Travancore. [rc]
Copyright © 2009 Bennett, Coleman & Co. Ltd.
September 29, 2009
INDIA: Banks woo elderly with special products
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CHENNAI, Tamil Nadu / The Times of India / Business / September 29, 2009
By Aparna Ramalingam, Times News Network
They don'[t have mega salaries or fancy designations. Nevertheless, India's seniors who account for 7% of the population are increasingly becoming an important target base for banks. They are being wooed with customised products and services.
While term deposits have been the preferred source of savings for seniors, (as banks offer 0.5% more for senior citizens), there is a growing interest for other schemes as well.
"We have started giving special offers to senior citizens on products like demat accounts, online trading accounts, forex transactions and even on credit cards," says Anindya Mitra, senior vice-president (retail liabilities), HDFC Bank.
Illustration courtesy: rediff.com
He says seniors are aware of new investment opportunities and with private banks providing investment planning services, many elders are up to date on their portfolios. In the case of demand deposits, the share of senior citizens to the total customer base is approximately 10% which increases to 33% for fixed deposits, for HDFC Bank.
But they are not restricted to conservative instruments. Many wealthy seniors are opting for private banking services.
"They have a larger investible surplus. They want to grow their wealth and maybe even leave behind targeted sums to their successors even after maintaining their lifestyles," says K V S Manian, group head (retail liabilities) of Kotak Mahindra Bank. Such people end up allocating a portion of their assets to equities. "Many of them also do SIP (systematic investment planning) in mutual funds in favour of their children and grand children," says Manian. Around 12% of Kotak's customers comprise senior citizens.
The latest offering by banks for seniors is reverse mortgage. Reverse mortgage involves borrowers mortgaging their property to a lender who then makes periodic payments to the borrowers. But this feature hasn't found many takers as inheritance runs deep in the Indian blood.
Seniors are known for conservative asset allocation and this explains why FD (fixed deposits) perhaps still remains the first and in many cases, the preferred choice of investment. "Such term deposits help them manage their liquidity better. Many other financial instruments have a lock-in clause and therefore money can't be withdrawn in case of an exigency. But FDs allow for such break-ups," says Ananthakrishna, who recently retired as chairman of Karnataka Bank.
Some banks have launched saving account variants that are specifically targeted at the elders. Features include hospitalisation cover and lower balance requirements. Many nationalised banks have pensioners who have opened accounts with the bank.
"We offer demand loan products (loan against deposits) for senior citizens, " says Mathur Nanjunda of State Bank of Travancore. [rc]
Copyright © 2009 Bennett, Coleman & Co. Ltd.
While term deposits have been the preferred source of savings for seniors, (as banks offer 0.5% more for senior citizens), there is a growing interest for other schemes as well.
"We have started giving special offers to senior citizens on products like demat accounts, online trading accounts, forex transactions and even on credit cards," says Anindya Mitra, senior vice-president (retail liabilities), HDFC Bank.
Illustration courtesy: rediff.com
He says seniors are aware of new investment opportunities and with private banks providing investment planning services, many elders are up to date on their portfolios. In the case of demand deposits, the share of senior citizens to the total customer base is approximately 10% which increases to 33% for fixed deposits, for HDFC Bank.
But they are not restricted to conservative instruments. Many wealthy seniors are opting for private banking services.
"They have a larger investible surplus. They want to grow their wealth and maybe even leave behind targeted sums to their successors even after maintaining their lifestyles," says K V S Manian, group head (retail liabilities) of Kotak Mahindra Bank. Such people end up allocating a portion of their assets to equities. "Many of them also do SIP (systematic investment planning) in mutual funds in favour of their children and grand children," says Manian. Around 12% of Kotak's customers comprise senior citizens.
The latest offering by banks for seniors is reverse mortgage. Reverse mortgage involves borrowers mortgaging their property to a lender who then makes periodic payments to the borrowers. But this feature hasn't found many takers as inheritance runs deep in the Indian blood.
Seniors are known for conservative asset allocation and this explains why FD (fixed deposits) perhaps still remains the first and in many cases, the preferred choice of investment. "Such term deposits help them manage their liquidity better. Many other financial instruments have a lock-in clause and therefore money can't be withdrawn in case of an exigency. But FDs allow for such break-ups," says Ananthakrishna, who recently retired as chairman of Karnataka Bank.
Some banks have launched saving account variants that are specifically targeted at the elders. Features include hospitalisation cover and lower balance requirements. Many nationalised banks have pensioners who have opened accounts with the bank.
"We offer demand loan products (loan against deposits) for senior citizens, " says Mathur Nanjunda of State Bank of Travancore. [rc]
Copyright © 2009 Bennett, Coleman & Co. Ltd.
