The Reserve Bank on Monday permitted banks to amortise the additional liability on account of revision in family pension over five years beginning 2021-22.
The banks, the RBI said, will be required to make appropriate disclosures of the accounting policy followed in this regard in the 'Notes to Accounts' to the financial statements.
The relaxation follows a request by the Indian Banks' Association (IBA) that it would be difficult for some banks to absorb large amounts of liability with regard to revision in the family pension in a single year.
The family pension of employees of banks was revised as part of the 11th Bipartite Settlement and Joint Note dated November 11, 2020.
The RBI said the issues were examined from a regulatory perspective, and as an exceptional case, it has been decided that banks covered by the aforementioned settlement may take the following course of action in the matter.
“The expenditure ... may, if not fully charged to the Profit and Loss Account during the financial year 2021-22, be amortised over a period not exceeding five years beginning with the financial year ending March 31, 2022, subject to a minimum of 1/5th of the total amount involved being expensed every year,” the RBI said.
The liability for enhancement of family pension should be fully recognised as per applicable accounting standards, it added.
“Just to thank #FM ma'am for the approval of Family pension. #RBI also acceded to our request for amortisation. Over 1.5 lacs family pensioners are going to benefit!,” IBA CEO Sunil Mehta said in a tweet.
“On behalf of the banking industry our sincere thanks and gratitude to #FM ma'am,” he added.
(With inputs from PTI)