Central bank wakes up to inordinate delays in payments faced by government pensioners; reprimands bankers and directs them to make good the dues immediately, along with penal interest
In what could be a major victory for government pensioners awaiting pension payments, the country’s central bank, the Reserve Bank of India (RBI), has taken bankers to task for ‘inordinate delays’ in disbursing revised pension and arrears.
Taking a serious view of the matter, the RBI has issued a circular (dated 9 April 2010) to various banks with an exasperated tone, directing the concerned banks to ensure that all entitled pensioners are paid their revised pension or arrears within 15 days from receipt of the circular. Additionally, it has also advised the banks to make a penal interest payment of 2% for any delay beyond the due date.
The RBI was forced to take this tough stand after receiving several complaints from pensioners, especially State government pensioners, alleging inordinate delay in disbursing the revised pension and arrears. Under the 6th Pay Commission recommendations, RBI had advised pension-paying banks to put in place a suitable mechanism so that pensioners could get the benefits announced by the government in the succeeding month’s pension payment itself. The controlling offices or head offices of agency banks were also advised to closely monitor and supervise the timely and accurate disbursement of pension to the pensioners.
An RBI review of the pension payment systems in various agency banks revealed the true story behind the picture. The circular highlights RBI’s findings as follows:
“Even though Pension Relief Orders were issued by the respective State Governments, there is inordinate delay ranging from one month to 18 months at the Agency Bank level in disbursing the revised pension as also the pension arrears. The delay was more pronounced in the case of those State Govt pensioners residing outside their States drawing pension from Agency Bank branches. To be specific, non-State resident pensioners have not received adequate attention and timely receipt of the revised pension/arrears for months together.”
The circular goes on to highlight the discrepancies of banks in administering the pension payouts. “Our experience was that customer service on pension payment matters was not effective at the branch level where customers normally interface with the front office,” said the central bank’s communiqué.
The RBI also makes note of the lack of coordination between the branches and the Central Pension Processing Centres, as also the absence of transparency in the calculation of the revised pension or arrears.
In a tone that is vividly indignant, the RBI questions the concerned banks’ indiscretions. “Pension payment is an agency function entrusted to you for a commission @ Rs60 per transaction and an amount of Rs487 crore has been paid to Agency Banks on account of pension disbursements alone during the year 2008-09. Although this is a significant income generating activity, it appears that it is still not given the due importance that it deserves.”
In view of the above, the RBI has advised banks to undertake review of the system of attending to customer service and have a pension accounts guide at all branches to assist the pensioners in all their dealings with the bank. Additionally, RBI has demanded that suitable arrangements be made, to place on the bank website details about the pension calculations, and made available to the pensioners at periodic intervals with sufficient advertisements to that effect.
With the RBI finally wisening up to the reality and putting its foot down squarely on the Agency banks, they will have to take a deeper look at their archaic systems and make life easier for pensioners. As the RBI rightly puts it, “Pension is the lifeline of the pensioners and any delay in affording their legitimate dues will rob them of the dignity of life to which they are entitled to”.
Global cues will continue to weigh on domestic bourses
The market was on a strong note on earnings optimism. However, concerns over overvaluation and possible further tightening of the monetary policy limited gains. The Sensex ended 101 points higher (0.5%) at 17,574 and the Nifty was up 24.5 points (0.4%) at 5,269. The market was up after subduing early volatility. In afternoon trading, it touched the intraday high. However, it pared a lot of its gains soon after, as it took a sharp slide from that point.
Asian stocks fell on Thursday as several major US firms issued disappointing profit outlooks, casting doubts over the strength of the global recovery, and as investors grew impatient for action over Greece’s debt crisis. Key benchmark indices in China, Hong Kong, Japan, South Korea and Taiwan fell by 0.15% to 1.27%. Key benchmark indices in Indonesia and Singapore rose by 0.25% to 0.26%.
US stocks remained flat on Wednesday as disappointing earnings outlooks from healthcare companies offset strong earnings from Morgan Stanley. The Dow edged up 7.86 points (0.07%), at 11,125. The S&P 500 dipped 1.23 points (0.1%) to 1,206. The Nasdaq inched up 4.3 points (0.17%) to 2,504. Germany has said that Greece may not avail of EU and IMF aid packages by mid-May.
Closer home, food inflation rose 17.65% in the year to 10 April 2010 and the primary articles’ index rose 14.14% in the year to 10 April 2010, latest government data showed.
The government is likely to issue new benchmark 10-year bonds by end-May or early-June. Iron ore exports declined in February as the government banned illegal mining. Exports were down 2.3% in February from the year-ago period. The government action taken on July last year has closed down 60 mines in Orissa.
The IMF has said that the global economy is recovering from the recession more quickly than expected. However, the rescue effort has put pressure on public finances. The entity projected India’s growth at 8.75% for calendar year 2010 and 8.5% in 2011. It expects demand in India to improve with the improvement in the labour market and investment.
Foreign institutional investors were net buyers on Wednesday of Rs82 crore. Domestic institutional investors were also buyers of Rs25 crore. The rupee gained in the late afternoon, on dollar sales.
Valecha Engineering (down 1.1%) has bagged two projects. The first project is for the Paradip project of Indian Oil Corporation. The second project is for the construction of a 35-km road in Chhattisgarh. Aban Offshore’s (down 1.3%) joint venture, Venture Drilling and Maersk Oil Angola (Maersk Oil) have reached an agreement to amend their drilling contract relating to drillship Deep Venture. Maersk Oil will redeliver the drillship upon completion of the Chissonga-2 well in Angola, around April 2010. XL Telecom and Engineering (up 10.1%) has said that that it will raise funds up to $100 million by issue of securities. The board of Sasken Communication Technologies (up 5.6%) in its meeting on 22 April 2010 has recommended a final dividend at the rate of Rs4 per share (40%) for the financial year ended 31 March 2010. Tata Motors (up 3.3%) has said that its Sanand plant will start production by 30th April and make up to 2.5 lakh Nano cars a year. Kale Consultants (down 1.2%) posted a growth of 34% and 73% in sales and operating profit in the March quarter, over the year-ago period.