RBI Extends Timeline by 5 Years for RRBs to Amortize Additional Pension Liabilities.

Banking & Finance

On 20 March 2025, the Reserve Bank of India (RBI) issued a directive regarding the Amortisation of Additional Pension Liability in Regional Rural Banks (RRBs).


      - As per the directive, RRBs are now permitted to amortise the additional pension liability over 5 years starting from March 31, 2025, with a minimum of 20% expensed annually. It applies to all RRBs with effect from the financial year 2024-25.

      - RRBs must now implement the pension scheme retrospectively from November 1, 1993, which will increase their pension liabilities.

     

Main Point :-   (i) Tier 1 Capital of RRBs will remain unaffected by unamortised pension expenses.

      (ii) RRBs were previously allowed to amortise their pension liability on account of the RRB (Employee) Pension Scheme 2018 for 5 years, beginning with the financial year ending March 31, 2019.


About RBI

Governor : Sanjay Malhotra
Headquarter : Mumbai
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