What changed
RBI withdrew three circulars (dated March 17, 2016, April 18, 1991, and May 6, 1991) that previously governed recovery of excess pension payments from pensioners by agency banks. These circulars are no longer valid from January 21, 2021. Banks must now seek direction from Pension Sanctioning Authorities for any recovery actions.
What it means for you
Agency banks can no longer rely on the withdrawn circulars for recovering excess pension amounts from pensioners; they must coordinate with pension sanctioning bodies. For bank-caused errors, the requirement to refund the government in lump sum immediately remains unchanged, reinforcing banks' accountability for their mistakes.
What you must do
- Cease using the three withdrawn circulars for pension recovery processes immediately.
- Contact respective Pension Sanctioning Authorities for guidance on recovering excess pension from pensioners.
- Refund the government in lump sum for any excess pension paid due to bank errors, without waiting for recovery from pensioners.
- Review internal processes to ensure compliance with the June 1, 2009 and March 13, 2015 circulars for government refunds.
Who it affects
All agency banks handling government pension payments, Pension Sanctioning Authorities, Bank staff involved in pension disbursement and recovery
What should we do if we have already started recovery under the withdrawn circulars?
Stop any ongoing recovery actions based on those circulars immediately. Seek fresh guidance from the Pension Sanctioning Authority for the specific case.
Are we still required to refund the government for bank-caused excess payments?
Yes, the requirement to refund the government in lump sum immediately upon detection remains in force, as per the June 1, 2009 and March 13, 2015 circulars.