The Reserve Bank of India (RBI) has released a revised Master Circular dated April 01, 2025, which explains how agency banks (such as SBI, PNB, BoB, etc.) must handle the disbursement of government pensions.
This circular brings together all important instructions issued up to March 31, 2025, ensuring smoother, faster, and more transparent pension payments for lakhs of pensioners across India.
This blog explains the circular in simple, easy-to-understand language, focusing on what pensioners and their families should know.
1. What Does the Master Circular Include?
Government pensions include:
- Basic pension
- Dearness Relief (DR)
- Any revision announced by Central or State Governments
RBI does not change government rules. It only guides banks on how to strictly follow government instructions. If there is confusion, banks must follow government orders first.
2. Faster Payment of Pension and Dearness Relief (DR)
Earlier, banks waited for government orders to reach each branch. Now:
Banks must download DR orders directly from:
- Government websites
- Emails
- Fax or postal copies
Result:
Pensioners get DR increases and revised amounts faster without any delay.
3. Banks Must Immediately Follow Government Instructions
All agency banks must:
- Implement government notifications without waiting for RBI approval
- Act quickly on pension revisions, arrears, and DR updates
This ensures no delays in monthly pension payments.
4. How and When Pension Will Be Credited
Banks will credit pension into the pensioner’s account as soon as instructions are received from Pension Paying Authorities.
Important rule:
Pension is usually credited in the last 4 working days of the month, except March, where it must be credited on or after April 1st.
5. Refund of Excess Pension Paid
If excess amount is paid:
When bank makes the mistake:
- Bank must immediately return the extra amount to Government
- Recovery from pensioner will be handled separately
If Government made the mistake:
- Bank will contact the concerned department directly
- RBI need not be involved
6. Support for Old, Sick & Disabled Pensioners
RBI has special rules to help pensioners who cannot visit the branch due to illness or disability.
Pensioner is too sick to sign:
- Thumb or toe impression is allowed
- Must be verified by two witnesses, including one bank official
Pensioner cannot sign OR give thumb impression:
- The bank will accept a mark on the withdrawal form
- This mark must also be verified by two witnesses
Who can withdraw the pension?
- Pensioner can nominate a trusted person
- This person must be identified by two witnesses and their signature recorded
Banks must display these instructions on branch notice boards.
7. Reimbursement Claims to RBI
Banks will claim reimbursement from RBI’s offices for Central/State pensions. This is a backend process and ensures smooth fund settlement.
8. Joint Account Can Continue After Pensioner’s Death
If the spouse already has a joint account with the pensioner mentioned in the PPO:
Bank must NOT force opening a new account
Family pension can continue in the same joint account.
9. Life Certificate – Banks Must Give Acknowledgement
Many pensioners complained about misplaced life certificates.
Therefore:
RBI instructs banks to:
- Give a signed receipt immediately
- Prefer a system-generated acknowledgement from CBS
- Provide digital acknowledgement for online life certificates
10. Single Window System for Faster Claims
This system ensures:
- Faster settlement between banks and RBI
- No delays in pension reimbursement
- Banks handle responsibility directly
11. Customer Service – Banks Must Improve Support
RBI emphasizes better service for pensioners.
Instructions to banks:
- Inspectors must review how branches serve pensioners
- Nodal officers must be appointed in each region/zone
- Monthly review by GM/CGM
- Pension-related meetings similar to Pension Adalats must be held
Banks must also provide:
- A toll-free pension helpline
- Trained staff with access to pension data
- Fast complaint resolution
12. Compensation for Delay in Pension Payment
If pension or arrears are delayed:
Pensioners must be compensated
Banks must pay 8% interest per annum for delayed payments.
Important:
Compensation must be credited automatically, without the pensioner asking.
13. Avoiding Delays in Pension Revision
Banks must:
- Obtain revised pension orders directly from the pension authorities
- Pay revised pension in the next month
- Keep pensioners informed
- Upload pension calculation details on bank websites
14. No Arrears Should Be Pending
Banks can claim agency commission only if they certify that:
- No pension arrears are pending
- No delays exist in crediting revised amounts
15. Checklist for Quality Audit (Annex 1)
Banks must internally check:
- Any delay in pension payment
- Whether nominations are updated
- Whether life certificates are collected in November
- Whether pension accounts are converted to joint accounts when needed
- Quality of complaint handling
- Proper stamping of challans and BSR code
Inspectors may even call pensioners to confirm satisfaction.
Conclusion
RBI’s 2025 Master Circular focuses on:
- Faster payments
- Better service
- Zero delay in pension/arrears
- Special support for disabled and elderly pensioners
- Strict accountability of banks
These changes ensure that pensioners receive their rightful dues on time, every month, with dignity and care.