Disbursement of Government Pension by Agency Banks

RBI/2025-26/05 CO.DGBA.GBD.No.S1/31.02.007/2025-26 April 01, 2025

All Agency Banks

Madam/Dear Sir

Master Circular - Disbursement of Government Pension by Agency Banks

Please refer to our Master Circular RBI/2024-25/06 dated April 01, 2024 on the above subject. We have revised and updated the Master Circular which consolidates important instructions on the subject issued by the Reserve Bank of India till March 31, 2025.

2. A copy of the revised Master Circular is enclosed for your information. This circular may also be downloaded from our website https://mastercirculars.rbi.org.in.

Yours faithfully

(Indranil Chakraborty)
Chief General Manager

Encl.: As above

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Master Circular – Disbursement of Government Pension by Agency Banks

Introduction

Payment of pension to retired government employees, including payment of basic pension, increased dearness relief (DR), and other benefits, as and when announced by the governments, is governed by the relevant schemes prepared by concerned Ministries/Departments of the Government of India and State Governments. This Master Circular consolidates important instructions on the subject issued by the Reserve Bank of India till March 31, 2025 (listed in Appendix). It does not replace or supersede any existing government instructions on the matter. The instructions issued by Pension Sanctioning Authority of the Central and State Governments and circulated by RBI in the past will continue to remain in operation subject to changes being made by the competent authority. In case of any doubt or apparent contradiction, agency banks may be guided by the relevant government instructions. Contents of various circulars issued in this connection by the Reserve Bank of India are summarized hereunder.

General Instructions

Government orders on DR, etc. on websites

2. In order to obviate the time lag between issue of DR orders and payment of DR to the beneficiary and to render expeditious service to senior citizens, the procedure of forwarding related government orders in respect of dearness relief etc. to pension disbursing agency banks has been discontinued. Agency banks may, therefore, act on the copies of government orders provided by government to them through post, fax, e-mails or by accessing from the government websites and authorize their pension paying branches to make payments to the pensioners immediately.

Prompt implementation of Government’s instructions by agency banks

3. All agency banks are advised to scrupulously follow all the guidelines/ instructions contained in various notifications of Government (Central as well as States) and take necessary action immediately without waiting for any further instructions from RBI.

Timing of pension disbursement by agency banks

4. The pension paying banks will credit the pension amount in the accounts of the pensioners based on the instructions given by respective Pension Paying Authorities.

Refund of excess pension payment to Government

5. Whenever any excess/overpayment is detected, the entire amount thereof should be credited to the Government account in lump sum immediately, when the excess/overpayment is due to an error on the part of the agency bank. This action is independent of recovery from the pensioner. Agency banks are requested to seek guidance from respective Pension Sanctioning Authorities regarding the process to be followed for recovery of excess pension paid to the pensioners, if any.

6. If the excess/wrong payment to the pensioner is due to errors committed by the government, banks may take up the matter with the full particulars of the cases with respective Government Department for a quick resolution of the matter. However, this must be a time bound exercise and the government authority’s acknowledgement to this effect must be kept on the bank’s record. The banks may take up such cases with government departments without reference to the Reserve Bank of India.

Withdrawal of pension by old/ sick/ disabled/ incapacitated pensioners

7. In order to take care of problems/ difficulties faced by sick and disabled pensioners in withdrawal of pension / family pension from the banks, agency banks may categorize such pensioners as under:

• (a) Pensioner who is too ill to sign a cheque / unable to be physically present in the bank.
• (b) Pensioner who is not only unable to be physically present in the bank but also not even able to put his/her thumb impression on the cheque/ withdrawal form due to certain physical defect /incapacity.

8. With a view to enabling such old/sick/incapacitated pensioners to operate their accounts, banks may follow the procedure as under:

• (a) Wherever thumb or toe impression of the old/sick pensioner is obtained, it should be identified by two independent witnesses known to the bank, one of whom should be a responsible bank official.
• (b) Where the pensioner cannot even put his/her thumb/ toe impression and also would not be able to be physically present in the bank, a mark can be obtained on the cheque/withdrawal form, which should be identified by two independent witnesses, one of whom should be a responsible bank official.
• (c) The responsible bank official has to be from the same bank, preferably from the same branch, where the pensioner is having his/her pension account.

9. The pensioner may also be asked to indicate to the bank as to who would withdraw the pension amount from the bank on the basis of cheque/ withdrawal form as obtained above and that person should be identified by two independent witnesses. The person who would be actually drawing the money from the bank should be asked to furnish his signature to the bank.

10. Accordingly, the agency banks are requested to instruct their branches to display the instructions issued in this regard on their notice board so that sick and disabled pensioners could make full use of these facilities. Agency Banks are also advised to strictly implement the instructions issued by RBI regarding the facilities to be provided to the sick and disabled persons and sensitise staff members in the matter and to refer to the FAQs on pension disbursement hosted on our website (www.rbi.org.in) in case of any doubt.

Reimbursement of pension payments

11. Link branches of agency banks may submit reimbursement claims to Reserve Bank of India, Central Accounts Section, Nagpur / Government Banking Division at Regional Office for Central / State Government pension payments respectively.

Continuation of either or survivor pension account after death of pensioner

12. All agency banks disbursing Central Government pension have been advised that in case the spouse (family pensioner) opts for existing joint account for credit of family pension, banks should not insist on opening a new account when the spouse is the survivor and having a joint account with the pensioner and in whose favour an authorisation for payment of family pension exists in the Pension Payment Order (PPO).

Life Certificate- Issuance of Acknowledgement

13. There have been complaints that life certificates submitted over the counter of pension paying branches are misplaced causing delay in payment of monthly pensions. In order to alleviate the hardships faced by pensioners, agency banks were instructed to mandatorily issue duly signed acknowledgements. They were also advised to consider entering the receipt of life certificates in their CBS and issue a system generated acknowledgement which would serve the twin purpose of acknowledgement as well as real time updation of records. Banks may provide digital acknowledgments in respect of digital life certificates submitted by the pensioners.