RBI rule: Banks must pay 8% interest to retired govt staff for pension delays; check details

In a recent directive by the Reserve Bank of India (RBI), all banks responsible for disbursing pensions to retired central and state government employees are now mandated to pay an interest of 8% per annum for any delays in pension payments. This requirement, outlined in the RBI’s master circular, is intended to compensate pensioners for late disbursements of their dues.

According to the circular, "Pension paying banks should compensate the pensioner for delay in crediting pension/ arrears thereof at a fixed interest rate of 8 per cent per annum for the delay after the due date of payment.” The directive further clarifies that this compensation will be provided automatically without requiring any claims from pensioners. The compensation should be provided at a fixed interest rate of 8% per annum for any delays occurring after the scheduled payment date.

The interest will be credited to the pensioner's account on the same day the bank processes the revised pension or pension arrears, applicable to all delayed payments since October 1, 2008.

The circular also emphasizes the need for banks to ensure a streamlined process for pension disbursement, avoiding delays by promptly obtaining copies of pension orders from the relevant pension paying authorities. Banks are instructed to complete pension payments without waiting for instructions from the RBI, thus ensuring that the pensioners receive their benefits in the subsequent month’s payment cycle.

Furthermore, the RBI has urged banks to offer better customer service, particularly to elderly pensioners, to facilitate smoother interactions. "All agency banks disbursing pension are advised to provide considerate and sympathetic customer service to the pensioners, especially to those pensioners who are of old age," the circular stated. This move is expected to significantly improve the quality of service provided to the pensioners, making the banking experience less cumbersome for them.

This directive comes as part of the RBI's efforts to enhance the reliability and efficiency of pension disbursements across India. With these measures in place, it is anticipated that pensioners will experience fewer delays and better service in their financial dealings with banks, thereby upholding the financial rights of retired government employees more robustly.