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RBI move on updated pension benefits quashed

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The Bombay High Court on Monday struck down the circular issued by the Reserve Bank of India (RBI) withdrawing updation benefits for its employees. The judgment was passed while hearing a petition filed by a retired employee in the Bombay HC.

Responding to the petition, the RBI had filed that the circular was issued following a government order to withdraw the pension updation for its employees. The HC was of the view that the government cannot override a decision taken by the RBI’s central board just by writing a letter.

It added that any order or advice to RBI should be passed within the powers entrusted to the government as per Section 7 of the RBI Act, which states, “The Central Government may from time to time give such direction to the RBI after consultation with the Governor of the bank as considered necessary in the public interest.”

However, these directions have not been given under any statutory provisions and, hence, do not have a legal validity to challenge the RBI circular, the court said. Official sources said an update of pension refers to revising the basic pension upwards after every revision of pay scales. The RBI pension scheme is on the lines of the central government’s pension scheme, in accordance with an RBI circular issued in March 1992.

The circular in question, which had been issued by RBI on October 9 last year, had withdrawn the updation of pension for RBI employees following the government order.

Sources said that, unless RBI or the government approaches the Supreme Court, the circular on withdrawal of pension updation benefits stands null and void. Thus, RBI’s retired employees will have to be paid their full arrears, which had been pruned following this circular.

The judgment is seen as a major development which endorses the autonomy of the RBI’s central board and its earlier decision to update its retired employees’ pension.

Employees have alleged that the withdrawal of the pension updation is totally contrary to the decision of the central government to shower updation benefits, both in salary and superannuation, to millions of its own employees.

They have made other demands too, including a grant of family pension at the rate of 30 per cent without ceiling in line with the Central Government scheme, computation of pension at an enhanced rate and improvement in pension scheme and gratuity consequent upon the acceptance of the recommendations of the Sixth Pay Commission report.

Employees are of the view that the pension issue could have been resolved amicably since its update requires Rs 10 crore only, while the corpus of RBI employees’ contribution fund itself is Rs 4,500-5,000 crore, according to sources close to the development. RBI updated the pension scheme in 2003 for pre-November 1997 retirees, aligning their basic pension with the basic pay prevalent at that time. The decision was taken by RBI’s central board in the presence of nominees of the Centre.

Incidentally, the RBI’s pension fund is self-sustaining without any contribution from the exchequer and the Fifth Pay Commission for Central Government employees had stipulated that autonomous institutions like the RBI may have their own pension scheme, subject to their fund position.

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