The Reserve Bank of India (RBI) has issued a new rule that benefits retired central and state government employees. According to the revised Master Circular released on April 1, 2025, if there is any delay by the pension-paying bank in crediting the pension or arrears (pending dues) to a pensioner’s account, the bank will have to pay interest at the rate of 8% per annum. This interest will serve as compensation for the delay and must be paid directly by the bank to the pensioner.
This change has been introduced after the RBI received several complaints from pensioners about excessive delays in receiving revised pension amounts and arrears. The circular clearly states that the interest for delayed pension payments should be credited automatically to the pensioner’s account on the same day the delayed pension or arrears are paid. The pensioner does not need to make any request or claim for this interest; it should be done by the bank on its own. This rule will apply to all delayed pension payments made since October 1, 2008.
Additionally, the RBI has directed banks to set up systems that allow them to quickly collect pension orders directly from the concerned authorities. This will help ensure that revised pension amounts are paid in the following month’s pension without any unnecessary waiting for instructions from the RBI. Moreover, bank branches handling pension accounts have been asked to provide proper guidance and assistance to pensioners and to treat them with care and respect, especially elderly pensioners who may need extra support.
This move by the RBI aims to make pension disbursement smoother, faster, and more pensioner-friendly by holding banks accountable for any delay and ensuring retired employees receive timely and fair treatment.
