Recovery of excess payment of pension: RBI withdraws existing circulars

RBI on Thursday (January 21, 2021) declared that the existing circulars related to recovery of excess pension paid by agency banks stands withdrawn with effect from the date of its circular dated January 21, 2021. The above decision was taken by the Central Bank in view of the recovery of excess /wrong pension payments from the pensioners are being made in a manner that is not in keeping with the extant guidelines / Court orders, the circular said.

The Central Bank clarified that “though the earlier circulars issued under the signature of RBI stand withdrawn, agency banks are requested to seek guidance from respective Pension Sanctioning Authorities regarding the process to be followed for recovery of excess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”. Agency banks are further advised that, where excess pension payment has arisen on account of mistakes committed by the bank, the amount paid in excess should be refunded to the Government in lump sum immediately after detection of the same and without waiting for recovery of any amount from the pensioners. In this regard, Banks may be guided by the guidelines laid down in RBI’s Circulars Nos.DGBA.GAD.H10450/45.03.001/2008-09 dated June 1, 2009, and DGBA.GAD.H.4054/45.03.001/2014-15 dated March 13, 2015, it said.

RBI in its circular dated March 17, 2016, informed the agency banks that as soon as the excess/wrong payment made to a pensioner comes to the notice of the paying branch, it should adjust the same against the amount standing to the credit of the pensioner’s account to the extent possible including lumpsum arrears payment.    “If the entire amount of overpayment cannot be adjusted from the account, the pensioner may be asked to pay forthwith the balance amount of overpayment. The circular further guided the agency banks “In case the pensioner expresses his inability to pay the amount, the same may be adjusted from the future pension payments to be made to the pensioners. For recovering the over-payment made to pensioner from his future pension payment in installments 1/3rd of net (pension + relief) payable each month may be recovered unless the pensioner concerned gives consent in writing to pay a higher installment amount”. However, said circular is now non-operational on the issue of circular dated January 21, 2021.