The Prime Minister
SUB: RATE OF INTEREST & EFFECTIVE DATE OF APPLICATION ON DELAYED PAYMENTS & ARREARS
RBI decision on payment of interest, that was earlier 2% above the normal rate, changed to flat rate of 8% simple rate on delayed payment of dues is welcome.
We wish to represent the following.
1. RBI guideline also falls short of justice & only partly compensate the loss & deny him/her the interest earning as discussed below
2. The Simple rate of interest is paid as per RBI guidelines.
3. The arrears of dues as a result of rectification of an anomaly from the date of anomaly but he does not get the interest paid from the same date.
Understanding the problem of Armed forces personnel in this regard.
A. We need to understand how the affected individual is at receiving end since he get arrears of his delayed payments.
B. The arrears dues are paid w.e.f date that is much earlier than the date of decision for payment & actual payment.
C. If the anomaly did not occur the affected individual would have received the difference of amount from the due date of arrears.
D. Since the money accrued on monthly basis could be invested in Recurring Deposits monthly saving investment plan.& earn interest on this differential amount of arrears per month & or could be invested in a fixed deposit term deposit & earn higher rate of interest than RD monthly saving investment plan.
E. We find that some of cases are filed & decided after a gap of many years either because of longer litigation or due to ignorance of the person to whom the money is due.
F. Many a times it is noticed that it takes years to decide on the policy & further delay in implementation the beneficiary becomes helpless to watch the delay caused.
G. We must also realize that most of the pensioners are not aware about their correct dues or only come to know from others or through consultancy.
H. Many times the Letters issued are not given wider publicity & some times are withdrawn after few year.
J. Those who did not have the access or knowledge are deprived of their dues.
K. They might win a court case if lucky but only the arrears are paid from the effective date of rectification & interest only in case of delay in the payment.
L. Hence it would be incorrect to hold them responsible for the delays of claims for their ignorance.
M. Whereas the officials dealing with pay & pensions are supposed to be experts -should be well aware of the possible loss to the affected personnel/ pensioners.
Solutions & Recommendations
a. We plead to change the application of interest payment from the due date of arrears.
b. The rate of interest should also be compounded.
c. The application of orders should be the responsibility of the dealing department & arrears as well interest payment should automatically apply & paid on delayed payments & arraers without any action from the beneficiary.
d. Beside the court orders the following arrears also should be treated as delayed payment & interest should be paid as per delayed payment.
I. The retrospective change of policy.
II. Delays caused in implementation.
III. Arrears dues paid in installments.
President AFVAI Chandigarh