RBI: RRBs Get 5 More Years to Amortise Additional Pension Liabilities

Current Context: The Reserve Bank of India (RBI) has extended the timeline for Regional Rural Banks (RRBs) to amortize their pension liabilities under the RRB (Employee) Pension Scheme 2018.

• Initially effective from November 1, 1993, RRBs can now spread their pension liability payments over five additional years, ending March 31, 2030.
• This decision, announced on March 20, 2025, mandates RRBs to expense at least 20% of their total pension liability annually.
• Any remaining liability must be disclosed as "unamortized expenditure" in their financial statements.
• The extension aims to ease financial pressure on RRBs, improve their fiscal stability, and ensure smooth compliance with regulatory standards.

Question:

Q.1 As per the RBI’s announcement on March 20, 2025, what is the minimum percentage of total pension liability that RRBs must expense annually?
a) 10%
b) 15%
c) 20%
d) 25%

Answer: c) RRBs are required to expense at least 20% of their total pension liability every year. This ensures a gradual reduction of liabilities while maintaining financial stability.