RBI circular: Banks should pay 8% interest to retired govt employees for pension payment delay

Retired central and state government employees will receive 8% interest per annum if there is a delay in the payment of pension or the arrears of the pension by the pension paying bank. This interest will be paid by the bank as a compensation to the pensioner, according to the RBI's latest master circular on disbursement of pension by banks.

The master circular says that pension paying banks should compensate the pensioners for delay in pension payment by paying 8% per annum interest on the arrears.

"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 circular said.

Automatic interest credit

Further, the interest on delayed pension should be credited automatically.

“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," the circular said.

The RBI's Master Circular has also directed banks to put in place a mechanism to immediately obtain copies of pension orders from the pension paying authorities directly. And, pension payments should be completed without waiting for the receipt of instructions from the RBI. This will ensure payment of benefits in the next month's pension itself instead of delaying the payment.

Further, the bank branches dealing with pension accounts are required to guide and assist the pensioners in their dealings with the bank.

"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 said.