RBI Says Banks Must Pay 8% Interest for Delayed Govt Pensions

In a move aimed at safeguarding the financial interests of retired government employees, the Reserve Bank of India (RBI) has issued a circular directing banks to pay 8% annual interest on any delayed pension payments. 

This directive seeks to ensure timely disbursement and eliminate the need for pensioners to initiate compensation claims.

Automatic Compensation and Simplified Procedures

According to the circular, any delay in the crediting of pension or arrears will now attract a fixed interest rate of 8% per annum, effective from the actual due date. Banks are instructed to automatically credit this compensation to the pensioner’s account on the same day the revised pension or arrears are paid. 

The RBI has made it clear that this provision applies to all delayed payments made since 1 October 2008. Furthermore, banks must act promptly in obtaining copies of pension orders from pension-paying authorities, ensuring that any revisions or arrears are credited in the succeeding month’s pension payment without waiting for separate instructions from the RBI.

Enhanced Support and Transparency for Pensioners

To enhance accessibility and support, the RBI has emphasised that bank branches must remain the primary point of contact for pensioners. 

Branches handling pension accounts are required to guide and assist pensioners in all interactions. In a bid to promote transparency, banks must publish detailed calculations related to pension disbursements both on their websites and within their branches at regular intervals. 

Additionally, appropriate advertisements must be made to raise awareness about these facilities. The RBI has also advised banks to adopt a considerate and empathetic approach while dealing with elderly pensioners, ensuring they receive courteous and effective service.

Conclusion

The RBI’s latest directive aims to uphold the dignity and rights of pensioners by holding banks accountable for delays and ensuring a more responsive and transparent pension disbursal system. 

By mandating automatic interest payments and improving branch-level support, the central bank reinforces its commitment to the welfare of retired government employees.

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