RBI clamps down on banks delaying pension payout
Sucheta Dalal  and  Sanket Dhanorkar 22 April 2010

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”. 

Lt Col Pawan Wahi
1 decade ago
I am a Defense Pensioner,entitled to 100% Disability pension.Disability pensions were
revised in Aug 2011 by PCDA and circular issued to all Banks to pay arrears.SBBJ,Khatipura,Jaipur,did not pay till I saw the orders at Sainik Welfare Board,Dehradun and wrote to the bank,who referred matter to PCDA.Ihad to visit Jaipur and get the arrears released in Jun/Jul 2012.Please educate me how to claim the interest on delayed payment,and what will be rate at which the bank will pay.My arrears were approx Rs 9,70,000/-,paid in two installments.Lt Col Pawan Wahi(Retd),Email:[email protected] Mob:9219385969.Thanks for the action on RBI's part lots will benefit.GOD BLESS
1 decade ago
Pensioners do not have access to circulars/notifications issued by authorities. RBI suggestion of uploading information on WEBSITE of respective banks is good.
It is accepted fact that pension is to be credited on the day it is due. But some banks credit pension even for its own employees after business hours inconveniencing many retired pensioners.
1 decade ago
Could any one forward me a copy of the RBI circular regarding timely payment of pension. Thanks
Shibaji Dash
1 decade ago
Pray the Banks listen to the Central Bank. Will RBI review the situation periodically?And take action against the recalcitrants putting the pensioners on notice about the outcome of its much laudable effort.
K B Patil
1 decade ago
This is one step that no one can find fault with. It is wrong for banks to trouble pensioners, some of them very old and having physical difficulties, this way. Three cheers to RBI. It shows that somebody in RBI has his heart in the right place!!
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