The Reserve Bank of India has issued updated clarifications as of April 30, 2026, regarding the Scheme for Payment of Pension to Government Pensioners through authorised banks. The guidelines ensure seamless pension disbursal, including crediting pensions based on instructions from Pension Sanctioning Authorities and allowing continuation of joint accounts for family pension without requiring new accounts. Banks must provide acknowledgements for life certificates and enable digital submissions through platforms like Jeevan Praman, including doorstep services for senior and disabled pensioners. The directions also outline procedures for withdrawal by incapacitated pensioners and mandate prompt revision of Dearness Relief based on government orders. Importantly, banks are required to compensate pensioners with 8% interest for delays caused by their errors. These measures aim to enhance efficiency, reduce hardship, and ensure transparency and accountability in pension disbursement systems.
Payment of Pension to Government Pensioners
(Updated as on April 30, 2026)
Scheme for Payment of Pension to Government Pensioners by Authorised Banks (ABs)
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 (GoI) and State Governments (SGs). RBI has issued certain instructions in this regard which is available in the Reserve Bank of India [Disbursement of Government Pension by Agency Banks (ABs)] Directions, 2026. Clarifications, in the form of questions and answers, on certain issues related to the instructions issued by RBI is given below.
1. Whether a Joint Account can be continued for family pension after death of a pensioner?
Yes, the ABs should not insist on opening of a new account in case of Central Government (CG) pensioner if the spouse in whose favour an authorization for family pension exists in the Pension Payment Order (PPO) is the survivor. The family pension should be credited to the existing account without opening a new account by the family pensioner for this purpose.
2. When is the pension credited to the pensioner’s account by the paying branch?
The pension paying banks credit the pension amount in the accounts of the pensioners based on the instructions given by the Pension Sanctioning Authorities (PSAs).
3. Can the pension paying bank recover the excess amount credited to the pensioner’s account?
(a) ABs are requested to seek guidance from respective PSAs regarding the process to be followed for recovery of excess pension paid to the pensioners, if any.
(b) If the excess/wrong payment to the pensioner is due to errors committed by the AB, the entire amount thereof should be credited to the Government account in lump sum immediately. This action is independent of recovery from the pensioner. ABs shall seek guidance from respective PSAs regarding the process to be followed for recovery of excess pension paid to the pensioners, if any.
4. Should acknowledgement be given by pension paying banks while accepting Life Certificates from pensioners?
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, ABs were instructed to mandatorily issue duly signed acknowledgements. They were also requested to consider entering the receipt of life certificates in their Core Banking Solution (CBS) and issue a system generated acknowledgement which would serve the twin purpose of acknowledgement as well as real time updation of records. ABs shall provide digital acknowledgements in respect of digital life certificates submitted by the pensioners.
5. Is it possible to submit life certificates without visiting the branch?
Yes, pensioners can submit life certificates without visiting the branch using ‘Jeevan Praman’ provided the Pension Sanctioning Authority is on boarded on the platform. Further, ABs have also been advised to provide super senior citizens (pensioners over 70 years of age) and differently abled or infirm persons (having medically certified chronic illness or disability) including those who are visually impaired, the facility to submit life certificate at the premises/ residence of such customers.
6. Can a pensioner withdraw pension from his/ her account when he/she is not able to sign or put thumb/toe impression or unable to be present in the bank?
Yes, instructions have been issued by RBI to pension paying banks to allow withdrawal of pension by following certain procedures which are given below:
Withdrawal of pension by old/ sick/ disabled/ incapacitated pensioners
(i) In order to take care of problems/ difficulties faced by sick and disabled pensioners in withdrawal of pension / family pension, ABs shall categorize such pensioners as under:
(a) Pensioner who is too ill to sign a cheque / unable to be physically present in the branch but can put his/her thumb impression on the cheque/withdrawal form.
(b) Pensioner who is not only unable to be physically present in the branch but also not able to put his/ her thumb impression on the cheque/ withdrawal form due to certain physical defect / incapacity.
(ii) With a view to enabling such old/sick/incapacitated pensioners to operate their accounts, ABs shall 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 is unable 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 pensioner may also be asked to indicate to the bank as to who would withdraw the 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
(d) In case the pensioner cannot sign due to loss of both hands, reference may be drawn to the Supreme Court judgement reported in AIR 1950 – Supreme Court, 265, that there must be physical contact between the person who is to sign and the signature can be by means of a mark. This mark can be placed by the person in any manner. It could be the toe impression, as suggested. It can be by means of mark which anybody can put on behalf of the person who has to sign, the mark being put by an instrument which has had a physical contact with the person who has to sign.
The responsible bank official referred to in Para 6(ii)(a) and 6(ii)(b) above, should be from the same bank, preferably from the same branch, where the pensioner is having his/ her pension account.
ABs have been asked to display the instructions issued in this regard on their notice board at the branches so that sick and disabled pensioners can make full use of these facilities.
7. How the payment of DR at revised rate is to be paid to the pensioners?
ABs shall revise the DR expeditiously on the basis of copies of Government Orders provided by Government to them through post, fax, e-mail, etc., and/or by regularly accessing the Government websites.
8. Whether a pensioner is entitled for any compensation from the ABs for delayed credit of pension/ arrears of pension?
Yes, ABs should compensate the pensioner for delay in crediting pension/ arrears thereof at a fixed interest rate of 8 per cent per annum for the period of delay after the due date of payment, if the delay is on account of error on part of the AB. Further, the compensation shall be credited to the pensioner’s account automatically, without any claim from the pensioner.
(Republished with Amendments)
Dear Sir,
Pensioners like me settled abroad send notarized statements for life certificate. Hope the banks continue this.
URKRao,
San Diego, CA, USA
Jun 29,2015
RBI does good assistance to pensioners in India.
Commuted pension paid in lump-sum is exempt from tax u/s 10(10 A)(i). This is recovered from pension every month in equal installments fixed in the PPO. In my case bank is paying me by deducting Rs. 14062/- every month i.e. Rs. 1,68,744 annually. While filing the return how this amount is to be treated because there is no column in the ITR form to show this. Last year this amount was inadvertently shown under the head 80 CCD and has been disallowed by the CPC as my other savings were more than Rs. 1,10,000. I have now received the intimation u/s 143 (1) raising a demand. What is the remedy in this case? Should I file a revised return or request for rectification? While filing the return, should it be deducted initially itself from the gross income like the loss on account of income from house property?
Dear Venkat,
Revised PPO(Pension payment order) is issued only on revision of pension.Direct credit to bank on changes in DA
Dear Mushak,
TDS on family pension will be deducted as per provisions of Income Tax Act and no separate authority is necessary.
Dear Sir,
Has Tds to be deducted from family pension ? If no any provisions or notifications regarding it? If Yes at what percentage have to deduct?
my bank branch does not give any payslips whenever there is change due to revision of pension or DA. Perhaps it is too much clerical burden for the branch. There should be alternate solution