RBI: Banks should pay 8% interest for the delay in crediting pension arrears

Reserve Bank of India has asked all the government banks which are paying a pension to compensate the pensioners an interest of 8% per annum. This interest is proposed for the delay in crediting the pension, revised pension or pension arrears for the delay of credit after the due date of the payment.

This has been notified through the master circular of RBI on the disbursement of government pension by banks.

Here is the what circular of RBI states:

  • 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 and the compensation shall be credited to the pensioner’s account automatically without any claim from the pensioner on the same day when the bank affords credit for revised pension/ pension arrears, in respect of all delayed pension payments made since October 1, 2008.
  • Pension paying banks have been advised to put in place a mechanism to obtain immediately the copies of pension orders from the pension paying authorities directly and make payments without waiting for receipt of instructions from the Reserve Bank of India so that pensioners should get benefits announced by the government in the succeeding month’s pension payment itself.
  • Suitable arrangements should be made to place the arithmetic and other details about pension calculations on the web, to be made available to the pensioners through the net or at the branches at the periodic interval as may be necessary and sufficient advertisement should be made about such arrangements.