In a recent directive from the Reserve Bank of India (RBI), all banks responsible for disbursing pensions to retired central and state government employees are now required to pay interest at the rate of 8% per annum for any delay in pension payment.
RBI Rule: In a recent directive from the Reserve Bank of India (RBI), all banks responsible for disbursing pensions to retired central and state government employees are now required to pay interest at the rate of 8% per annum for any delay in pension payment. RBI’s master circular increases this requirement. The aim of this requirement is to compensate pensioners for late payment of their dues. According to the circular, ‘Pension paying banks should compensate the pensioner for delay in crediting pension/dues at a fixed rate of interest of 8 per cent per annum after the due date of payment.’
What is the detail?
]The directive further clarifies that this compensation will be provided automatically without requiring any claim from the pensioners. Compensation for any delay occurring after the due payment date should be provided at a fixed interest rate of 8% per annum. Interest will be credited to the pensioner’s account on the same day on which the bank processes the revised pension or pension arrears, which will be applicable to all late payments from October 1, 2008.
What’s in the circular?
The circular also emphasises the need for banks to ensure a streamlined process for pension disbursement so that delays can be avoided by promptly obtaining copies of pension orders from the concerned pension paying authorities. Banks have been directed to complete pension payments without waiting for instructions from the RBI, thus ensuring that pensioners receive their benefits in the next month’s payment cycle. Further, the RBI has urged banks to provide better customer service, especially to elderly pensioners, to facilitate seamless interaction.
The circular states, “All agency banks distributing pensions are advised to provide considerate and empathetic customer service to pensioners, particularly those pensioners who are aged.” The move is expected to lead to improved service delivery to pensioners, making the banking experience less cumbersome for them.
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