These instructions by RBI clearly indicate that huge additional liability for Banks on account of enhancement in rate of family pension need not be an immediate burden.The RBI permits the Banks to amortize the additional liability over five years by expensing the same in five years.
When LIC provided OMOP in 2019,the additional liability of Rs 11000+ cr was amortized over five years .
So any additional liability on account of either enhancement of family pension in LIC or upgradation of pension need not be confounding and formidable for LIC and amortization is an easy method of meeting these liabilities,especially considering that the beneficiaries of LIC Pension Rules 1995 form a closed group.
This point needs to be used in SC if LIC raises the bogey of huge additional financial liability on account of upgradation of pension.
C .h Mahadevan
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