RRBs Allowed 5-Year Amortisation for Retrospective Pension Liability
No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2024-2025/127 · issued 20 Mar 2025 · ~1 min read
Quick answerRBI allows RRBs to spread the additional pension liability from implementing the scheme retrospectively (Nov 1, 1993) over up to 5 years from FY25, with minimum 20% expensed annually. Unamortised amount won't reduce Tier 1 capital.
What changed
Previously, RRBs could amortise pension liability from the 2018 scheme over 5 years from FY19. Now, with the scheme effective from November 1, 1993, RBI permits amortisation of the resulting additional liability over up to 5 years starting FY25, subject to a minimum 20% annual expense.
What it means for you
RRBs get relief from a one-time hit to profits by spreading the retrospective pension cost. The unamortised portion not reducing Tier 1 capital helps maintain capital ratios. Banks must disclose the accounting policy and the impact on net profit if fully expensed.
Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.
What banks were required to do at the time
Recognise full pension liability as per accounting standards immediately.
Amortise the additional expenditure over max 5 years from FY25, expensing at least 20% each year.
Disclose the accounting policy and unamortised amount in Notes to Accounts.
Show the consequential net profit impact if the expenditure were fully recognised.
Ensure unamortised pension expenditure is not deducted from Tier 1 capital.
Who it affects
All Regional Rural Banks (RRBs), RRB finance and compliance teams, Auditors of RRBs
❓ Common questions
Regulatory timeline
Stated effective dateeffective from November 1, 1993
Decoded by BankPulse2026-06-18 02:25 IST
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn03 Aug 2026, 04:00 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
Can RRBs expense less than 20% of the pension liability in any year?
No, the circular mandates a minimum of 20% of the total pension liability must be expensed each year during the amortisation period.
Does the unamortised pension expenditure affect capital adequacy?
No, the circular explicitly states that pension-related unamortised expenditure will not be reduced from Tier 1 Capital of RRBs.
📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Repealed byRBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #73: DOR.ACC.REC.No.67/21.04.018/2024-25 — "Amortisation of Additional Pension Liability - Implementation of Pension Scheme in Regional Rural Banks with Effect from ”
📜 Read the original circular — full text as issued by RBI
RBI/2024-2025/127
DOR.ACC.REC.No.67/21.04.018/2024-25
March 20, 2025
Madam / Sir,
Amortisation of additional pension liability - Implementation of Pension Scheme in Regional Rural Banks with effect from November 1, 1993 - Prudential Regulatory Treatment
In terms of NABARD circular NB.DoS.Pol.HO/2533/J-1/2019-20 dated December 12, 2019, Regional Rural Banks (RRBs) were earlier permitted to amortise their pension liability on account of RRB (Employee) Pension Scheme 2018 over a period of five years, beginning with financial year ending March 31, 2019. RRBs are now required to implement the pension scheme with effect from November 1, 1993. However, in view of the difficulties expressed in absorbing the increased liability in a single year, it has been decided that RRBs may take the following course of action in the matter:
The liability on account of applicability of pension scheme shall be fully recognised as per the applicable accounting standards.
The expenditure, on account of revision in the pension, may, if not fully charged to the Profit and Loss Account during the financial year 2024-25, be amortised over a period not exceeding five years beginning with the financial year ending March 31, 2025, subject to a minimum of 20 per cent of the total pension liability involved being expensed every year.
Appropriate disclosure of the accounting policy followed in this regard shall be made in the ‘Notes to Accounts’ to the financial statements. Banks shall also disclose the amount of unamortised expenditure and the consequential net profit if the unamortised expenditure had been fully recognised in the Profit & Loss Account.
Pension related unamortised expenditure would not be reduced from Tier 1 Capital of the RRBs.
Applicability
2. This circular is applicable to all the RRBs with effect from financial year 2024-25.
3. The Reserve Bank of India (Financial Statements - Presentation and Disclosures) Directions, 2021 shall be updated suitably to reflect these changes.
Yours faithfully,
(Usha Janakiraman)
Chief General Manager-in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2024-2025/127 · issued 20 Mar 2025. The plain-English explanation above is BankPulse’s own independent summary.
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12794&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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