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Saturday, April 4, 2009
ROLE OF BANKS IN PENSION DISBURSEMENT
The main role of banks is to accept deposits from the public and lend it to the needy public. The difference between the rates of interest paid to the depositors and the interest charged from the borrowers is the profit earned by the banks. Modern commercial banks undertake lot of business initiatives with the aim of earning profit in many ways, which the common people cannot understand. Even the advanced countries today face financial crunch because of the different types of lending which has no guaranteed return.
2. The disbursement of pension to millions of pensioners is undertaken by banks on commission basis. Even the salaries of thousands and thousands of government and private sector employees are disbursed by banks because of the advancement of information technology. Disbursement of pension requires certain amount knowledge on pension matters. Unlike DPDOs and Treasuries, the Banks are not having well trained personnel for handling these pensions. But the volume of pension transactions done by the banks are more than the DPDOs and Treasuries.
3. Repeated operations like payment of monthly pension on specified dates, and payment of dearness relief to the pensioners have been improved a lot by centralizing the pension payment and by using advanced information technology (Core Banking Solution)
4. However, the banks are finding it difficult in revising the pension and payment of correct arrears to the defence pensioners. Even out-sourcing the 6th CPC pension revision work for the defence pensioners is not successful because of the incorrect basic data base about the defence pensioners with the bank. The Defence Pension Sanctioning Authorities and the Ministry of Defence also does not pay much attention towards perfect implementation of their orders by the banks. The PCDA(P) Allahabad is handling around 22 lakh defence pensions. There is no proper reconciliation of defence pension payment accounts with the banks. The budget provisions are not overdrawn in case of defence pension. Therefore the agencies involved in monitoring the expenses are not worried.
5. While the MOD and PCDA(P) Allahabad, are keeping mum, only the Banks and pensioners face the crunch. We hope the banks in due course will somehow improve the pension payment system of its own by out-sourcing it to experts. Let us hope for the best.