R B I's MASTER CIRCULAR ON AGENCY COMMISSION

 

1. Agency Commission Payable to Banks on Government Transactions

[DGBA.GAD.No.H.7575/31.12.011/2011-12 dated May 22,2012]

Reserve Bank of India carries out the general banking business of the Central and State Governments through its own offices and through the offices of the Agency Banks appointed under Section 45 of the RBI Act, 1934, by mutual agreement. RBI pays agency commission (also called turnover commission) to the Agency Banks for the Government business handled by them. As per paragraph 5 of the Agency Bank agreement, RBI pays agency commission at a rate determined by it. A review in this regard was made and it has been decided to prescribe a revised agency commission structure, as under:

Sr. No.	Type of Transaction	Unit	Existing Rate	Revised Rate
1. (i)	Receipts-Physical mode	Per transaction	` 45/-	` 50/-
(ii)	Receipts-e-mode	Per transaction	` 45/-	` 12/-
2.	Pension Payments	Per transaction	` 60/-	` 65/-
3.	Payments other than Pension	Per Rs.100 turnover	9 paise	5.5 paise

2. In this context, the ‘Receipts-e-mode transactions’ indicated against Sr. No. 1(ii) in above table would refer to those transactions involving remittance of funds from the remitter’s bank account through internet banking as well as such transactions which do not involve physical receipt of cash /instruments.

3. The revised rates are effective from July 1, 2012.

2. Agency Commission towards Public Provident Fund Scheme, 1968 (PPF) and Senior Citizen Savings Scheme 2004 (SCSS)

[RBI/2006-07/289 (Ref: DGBA.GAD.H-14024/31.12.010/2006-07 dated March 16, 2007)]

read with: [DGBA.GAD.No.H.7575/31.12.011/2011-12 dated May 22, 2012]

The issue of payment of agency commission by Reserve Bank of India for handling PPF and SCSS was examined in consultation with the Government of India and it was decided to follow only one channel of payment of remuneration to banks for handling transactions under PPF and SCSS. Accordingly, Reserve Bank of India will pay agency commission w.e.f. July 1, 2012 on transactions relating to PPF and SCSS at the following rates:

a) Receipts –i) Physical mode- `50/- per transaction
ii) e-mode- ` 12/- per transaction

b) Payments – 5.5 paise per ` 100/- turnover

Government of India will discontinue the payment of remuneration for managing PPF and SCSS.

3. Government transactions eligible for Agency Commission

[RBI/2004/305 (Ref: DGBA.GAD.No.H-2625 -2658/ 31.12.010(C) /2004-05) dated December 17, 2004]

[DGBA.GAD.No. H- 8852 /31.12.010(C)/2010-11 dated June 21, 2011]

The following transactions undertaken by agency banks are eligible for agency commission :

• Revenue receipts and payments on behalf of the Central/State Governments
  
• Pension payments in respect of Central / State Governments
  
• Special Deposit Scheme (SDS) 1975, Public Provident Fund (PPF) Scheme
  
• Senior Citizen Savings Scheme (SCSS)
  
• Any other item of work specifically advised by Reserve Bank as eligible for agency commission (viz. Relief Bonds/ Savings Bonds etc. transactions)

Short term/long term borrowings of State Governments raised directly from financial institutions and banks are not eligible for agency commission as these transactions are not considered to be in the nature of general banking business. Reserve Bank pays the agency banks separate remuneration as agreed upon for acting as agents for management of public debt. Transactions arising out of Letter of Credit (L/C) opened by banks on behalf of Ministries/Departments etc. do not qualify for agency commission.

However, in the context of references received from some agency banks, the issue of collection of Stamp Duty by banks as an eligible item for agency commission was examined by us and it has been decided to treat the Government transactions regarding collection of Stamp Duty by agency banks as an eligible item for agency commission as detailed below:

i) Whenever agency banks collect stamp duty through physical mode or e-mode (challan based), they are eligible for payment of agency commission, provided the agency banks do not collect any charges from the members of public or receive remuneration from the State Government for doing this work.

ii) As regards franking activity, if the agency bank is engaged by the State Government as Franking Vendor and it collects stamp duty from the public for franking the documents, it will not be eligible for agency commission since the State Government is paying commission to it as Franking Vendor. However, the agency bank which collects the stamp duty paid by the Franking Vendor for credit to the Treasury through challan in physical or e-mode for purchase of the franking bar, would be eligible for agency commission since it is a regular payment of Stamp Duty as stated under item (i) above.

All agency banks while claiming Turnover Commission (ToC) should certify that no claim of ToC is made on ineligible transactions.

(Source- RBI website)