The Reserve Bank of India (RBI) on Monday has capped the penalty on delays in pension payment to 8% per annum.
Earlier, pensioners would get the bank rate plus 2%—i.e. 10.5% annually.
According to the current process, once the government—central, state or a public sector undertaking— issues the pension payment order, the bank is supposed to pay the pension in the next two to three days. Banks make the payments from their own resources, from their nominal accounts and subsequently claim the money from the RBI.
“A pensioner is entitled for compensation for delayed credit of pension / arrears... and the same should be credited to the pensioner's account automatically by the bank on the same day when the bank affords delayed credit of such pension/arrears, etc, without any claim from the pensioner," the RBI circular says.