RBI asks banks to pay 8% interest for delay in central govt pension payment

Interest should be paid automatically, without any demand from the pensioner: RBI circular

The Reserve Bank of India (RBI) has asked “agency banks” that disburse pensions to central government retirees to compensate for delays by paying an interest rate of 8 per cent per annum.

 

The regulator issued a master circular dated April 1 for this. According to the circular called ‘Disbursement of Government Pension by Agency Banks’, such organisations are obligated to pay interest for any delay in crediting pension to the accounts of central government civil pensioners. This includes superannuation, family pensions, and other retirement-related benefits.

 

Mandatory interest for delays

 

“Agency Banks shall compensate the pensioner for delay in crediting the pension/arrears thereof by paying compensation at a fixed interest rate of 8 per cent per annum,” said the circular.

 

It emphasised that the interest should be paid automatically, without any demand from the pensioner. If there is a delay because of an error, the bank must credit the interest amount to the pensioner’s account on the same day the delayed pension is finally paid.

 

What RBI wants

 

The RBI’s directive aims to enforce accountability in the pension disbursal system and ensure timely payments. It intends to streamline the process and uphold the rights of senior citizens reliant on their pension income.

 

According to the circular, agency banks have to maintain records of delays and the compensation paid. These records must be made available for inspection by the RBI or other authorities as needed.

 

The directive applies to all pensions disbursed by agency banks on behalf of the central government, including civil pensions, family pensions, and other forms of retirement benefits.

 

The RBI said that agency banks should follow its guidelines and ensure that delays are avoided. In case of systemic issues, banks must report them to the RBI.