RBI/2017-18/2
DGBA.GBD.No.2/31.12.010/2017-18
July
1, 2017
All Agency Banks
Dear Sir / Madam
Master Circular on Conduct of
Government Business by Agency Banks - Payment of Agency Commission
Please refer to our Master Circular RBI/2015-16/81
dated July 1, 2015 on the above subject. We have now revised
and updated the Master Circular which consolidates important instructions
on the subject issued by the Reserve Bank of India till June 30, 2017.
2. A copy of the revised Master Circular is
enclosed for your information. This circular may also be downloaded from
our website www.mastercirculars.rbi.org.in.
Yours faithfully
(S. Ramaswamy)
Principal Chief General Manager
Encl: As above
MASTER
CIRCULAR ON AGENCY COMMISSION
Introduction
1. The 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 to the agency banks for the government business
handled by them. This Master Circular consolidates the instructions
contained in the circulars listed in Annex 1.
Government transactions eligible
for agency commission
2. Transactions relating to the
following government business undertaken by agency banks are eligible for
agency commission:
a.
Revenue
receipts and payments on behalf of the Central/State Government
b.
Pension
payments in respect of Central / State Governments
c.
Special
Deposit Scheme (SDS) 1975
d.
Public
Provident Fund (PPF) Scheme, 1968
e.
Senior
Citizen Savings Scheme (SCSS), 2004
f.
Kisan
Vikas Patra, 2014 and Sukanya Samriddhi Account
g.
Any
other item of work specifically advised by Reserve Bank as eligible for
agency commission (viz. Relief Bonds/ Savings Bonds etc. transactions)
3. 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
Letters of Credit / Bank Guarantee opened by banks on behalf of
Ministries/Departments etc. do not qualify for agency commission.
4. 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.
5. 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
above.
6. All agency banks while
claiming agency commission should certify that no claim of agency
commission is made on ineligible transactions.
7. Agency banks paying their own
tax liabilities through their own branches or through authorised branches
of State Bank of India or offices of Reserve Bank of India wherever they do
not have their own authorised direct tax collection branch should indicate
the same separately in the scroll. Such transactions will not be eligible
for payment of agency commission. Banks should furnish a certificate to the
effect that own tax liabilities (TDS, Corporation Tax, etc.) paid by them
have been excluded while claiming agency commission.
In this connection, it is
clarified that the following activities do not come under the purview of
agency bank business and are therefore not eligible for payment of agency
commission.
(a) Furnishing of bank
guarantees/security deposits, etc. through agency banks by government
contractors/suppliers, which constitute banking transactions undertaken by
banks for their customers.
(b) The banking business of
autonomous/statutory bodies/Municipalities/ Corporations/Local Bodies.
(c) Payments of a capital nature
such as capital contributions/subsidies/grants made by governments to cover
losses incurred by autonomous/statutory bodies/ Municipalities/
Corporations/Local Bodies.
(d) Prefunded schemes which may
be implemented by a Central Government Ministry/Department (in consultation
with CGA) and a State Government Department through any bank.
Rates for agency commission
8. As per paragraph 5 of the
agency bank agreement, RBI pays agency commission at rates determined by
it. The rates applicable with effect from July 1, 2012 are as under:
Sr.
No.
|
Type
of Transaction
|
Unit
|
Revised
Rate
|
a.
|
(i)
|
Receipts - Physical mode
|
Per transaction
|
? 50/-
|
|
(ii)
|
Receipts - e-mode
|
Per transaction
|
? 12/-
|
b.
|
Pension Payments
|
Per transaction
|
? 65/-
|
c.
|
Payments other than Pension
|
Per ? 100 turnover
|
5.5 paise
|
9. In this context, the
‘Receipts-e-mode transactions’ indicated against Sr. No. a.(ii) in the
above table 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 at
all. For example, challan generated electronically and submitted to agency
bank along with cash / instrument should be treated as transaction under
physical mode.
10. With reference to the
implementation of Goods and Service Tax (GST) regime, it is advised that a
single Common Portal Identification Number (CPIN), processed successfully
leading to generation of a Challan Identification Number (CIN), under GST
payment process, may be treated as a single transaction, even if multiple
major head/sub major head/minor head of accounts are credited. This means
that CGST, SGST, IGST and Cess etc. paid through a single challan would
constitute a single transaction. Thus, all such records clubbed under a
single challan i.e., CPIN have to be treated as a single transaction for
the purpose of claiming agency commission. This will come into effect from
July 1, 2017.
11. Similarly, in case of
transactions not covered under GST, it is emphasised that a single challan
(electronic or physical) should be treated as single transaction only and
not multiple transactions, even if the challan contains multiple major
head/sub major head/minor head of accounts that will get credited. Therefore,
records clubbed under a single challan processed successfully have to be
treated as a single transaction for the purpose of claiming agency
commission.
12. Agency banks would be
eligible to claim agency commission for pension transactions at the rate of
? 65/- per transaction only when the entire work relating to disbursement
of pension including pension calculation is attended to by them. If the
work relating to pension calculations, etc., is attended to by the
concerned Government Department / Treasury and the bank branches are
required only to credit the amount of pension to the pensioners' accounts
maintained with them by a single debit to Government Account, such
transaction is to be categorised under ‘other than pension payment’ and
would be eligible for payment of agency commission @ 5.5 paise per ? 100/-
turnover w.e.f. July 1, 2012.
13. Agency commission is payable
to an agency bank at the full rate provided the transactions are handled by
the bank at all stages. Where, however, the work is shared between two
banks, the agency commission is shared between the banks in the proportion
of 75:25. Thus, broadly, the agency commission is payable to the agency
banks as detailed below:
a.
At the
full rate, in cases where the transactions are handled by the bank at all
stages, i.e., up to the stage of dispatch of scrolls and challans / cheques
to the Pay and Accounts Offices, and treasuries/sub-treasuries.
b.
At 75%
of the applicable rate, where the dealing branch is required to account for
the transaction by passing on the scrolls and documents to the
local/nearest branch of Reserve Bank of India or any agency bank conducting
government business.
c.
At 25%
of the applicable rate, in the case of agency branch which received the
scrolls and documents from dealing branches of other banks and is
responsible for the accounting of these transactions and dispatching of the
scrolls and documents to the Pay and Accounts Offices, Treasuries, etc.
14. The number of transactions
eligible for payment of agency commission should not exceed 14 per
pensioner per year. This includes one monthly credit for payment of net
pension and a maximum of two per year for payment of arrears on account of
increase in dearness relief, if applicable. Cases involving payment of
arrears on account of late start/restart of pension qualifies as a single
transaction for claiming of agency commission. In other words, any payment
of arrears on account of late start/restart of pension should be treated as
a single credit transaction and not as separate monthly credits.
Claiming agency commission
15. Agency banks are required to
submit their claims for agency commission in the prescribed format to CAS
Nagpur in respect of Central government transactions and the respective
Regional Office of Reserve Bank of India for State government transactions.
The revised formats for claiming agency commission for all agency banks and
separate and distinctive set of certificates to be signed by the branch
officials and Chartered Accountants are given in Annex-2. These certificates would be in addition to
the usual Certificate from ED / CGM (in charge of government business) to
the effect that there are no pension arrears to be credited / delays in
crediting regular pension / arrears thereof.
16. Where the External Auditor
is also the Concurrent Auditor / Statutory Auditor, claims can be certified
by such Concurrent Auditor / Statutory Auditor. The auditor’s certificate
should, inter-alia, state that:
a.
‘receipt’
and ‘pension payment transactions’ as also the agency commission claims for
‘payments other than pension payments’ indicated in the agency commission
claim application submitted to the RBI are tallied with the records
maintained at the concerned branch/es of the agency bank; and
b.
the
agency commission claims made in respect of volume (number) based
transactions viz. ‘receipt’ and ‘pension payment transactions’ have been
claimed only once and the same stands excluded while arriving at value
based transactions in respect of ‘payments other than pension payments’.
In addition to this, agency
banks are required to ensure that the agency bank’s internal inspectors /
auditors verify the agency commission claims submitted by their branches
and confirm their accuracy during the course of their inspection / audit.
17. Agency banks are required to
ensure that agency commission claims submitted to the Regional Offices of
Reserve Bank of India / Central Accounts Section, Nagpur in the prescribed
format are accurate. Agency banks may also alert their branches concerned
to ensure that agency commission claims submitted to our Regional Offices
are accurate. Such erroneous claims, if certified by the Internal /
Concurrent Auditors, will defeat the very purpose of making such
requirement an essential condition for making quarterly claims.
18. Agency banks are advised to
furnish their claim on agency commission to Reserve Bank from two quarters
to 90 days from the end of the quarter in which the transactions have been
conducted. If the banks fail to lodge the claims within the stipulated
period mentioned above they may forward the same only after giving reasons
for delay. This will be applicable for the agency commission claims for the
quarter ended June 30, 2017 onwards.
19. RBI decided to reimburse
agency banks the amount of Service Tax paid by them on agency commission
with effect from July 1, 2012.
Deduction of TDS on Agency
Commission
20. Central Board of Direct
Taxes (CBDT) has clarified that ‘tax would not be required to be deducted
by RBI on the agency commission paid or credited by it to agency banks for
transacting general banking business of the Central Government and State
Governments’. However, agency commission would be taxable in the accounts
of banks concerned as it is part of the bank’s income.
Penal interest for wrong claims
21. Agency banks will be liable
to pay penal interest at Bank Rate as notified by Reserve Bank of India
plus 2% for any wrong claims of agency commission settled.
Annex
1
List
of circulars consolidated in the Master Circular
No.
|
Circular
No.
|
Date
|
Subject
|
1.
|
DGBA.GAD.No.H-190/31.12.010/2003-04
|
September 14, 2003
|
TDS on Agency Commission will
not be effected by RBI
|
2.
|
DGBA.GAD.No.H-41/42.02.001/2003-04
|
July 22, 2004
|
Scheme for acceptance of
Income and other direct taxes (Central Government) and Profession
tax/other taxes of State Governments through agency banks.
|
3.
|
DGBA.GAD.No.H-1225-1258/ 42.02.001/2004-05
|
October 27, 2004
|
Scheme for acceptance of
Income and other direct taxes (Central Government) and Profession
tax/other taxes of State Governments through agency banks
|
4.
|
DGBA.GAD.No.H-2625-2658/ 31.12.010(C)/2004-05
|
December 17, 2004
|
Remuneration for conduct of
Government business by agency banks – Payment of Turnover Commission
|
5.
|
DGBA.GAD.No.H-3568-3601/42.01.001/2004-05
|
January 13, 2005
|
Scheme for acceptance of
Income and other direct taxes (Central Government) and Profession
tax/other taxes of State Governments through agency banks
|
6.
|
DGBA.GAD.No.H-4530/31.12.010(C)/2005-06
|
October 27, 2005
|
Agency Commission claims
submitted by agency banks – common irregularities
|
7.
|
DGBA.GAD.No.H-11136/31.12.010(C)/2005-06
|
January 31, 2006
|
Agency Commission claims
submitted by agency banks – common irregularities
|
8.
|
DGBA.GAD.No.H-11794/31.12.010(C)/2005-06
|
February 13, 2006
|
Agency Commission on Special
Deposit Scheme
|
9.
|
DGBA.GAD.No.H-13118/31.12.010(C)/2005-06
|
March 2, 2006
|
Agency Commission claims
submitted by agency banks – common irregularities
|
10.
|
DGBA.GAD.No.H.13034/31.12.010(C)/2006-07
|
February 27, 2007
|
Agency Commission on pension
transactions
|
11.
|
DGBA.GAD.No.H-14024/31.12.010/2006-07
|
March 16, 2007
|
Agency Commission towards
Public Provident Fund Scheme, 1968 (PPF) and Senior Citizen Savings
Scheme 2004 (SCSS)
|
12.
|
DGBA.GAD.H-1800/ 31.12.010(C)/2009-10
|
August 21, 2009
|
Abnormal increase in agency
commission claims
|
13.
|
DGBA.GAD.H-3903/31.12.010(C)/2009-10
|
November 11, 2009
|
Agency Commission claims to be
certified by the External Auditor / Chartered Accountant
|
14.
|
DGBA.GAD.No.H.160/31.12.010(C)/2010-11
|
July 7, 2010
|
Agency Commission claims to be
certified by the External Auditor
|
15.
|
DGBA.GAD.No.H-670/31.12.010(C)/2010-11
|
March 24, 2011
|
TDS on Agency Commission will
not be effected by RBI
|
16.
|
DGBA.GAD.No.H-8852/31.12.010(C)/2010-11
|
June 21, 2011
|
Payment of agency commission
on collection of Registration fee and Stamp Duty
|
17.
|
DGBA.GAD.No.7575/31.12.011/2011-12
|
May 22, 2012
|
Agency Commission on pension
transactions
|
18.
|
DGBA.GAD.No.H.2529/31.12.010(C)/2012-13
|
October 31, 2012
|
Conduct of Government Business
by Agency Banks – Payment of Agency Commission – Revised Format for
claiming agency commission by banks-Implementation of Working Group
recommendations
|
19.
|
DGBA.GAD.No.H-2995/ 31.12.010/2014-15
|
January 7, 2015
|
Payment of agency commission –
Certification of claims by external auditors
|
20.
|
DGBA.GAD.No.14/15.02.003/2015-16
|
July 2, 2015
|
Kisan Vikas Patra, 2014 and Sukanya
Samriddhi Account
|
21.
|
DGBA.GAD.No.617/31.12.010(C)/2015-16
|
August 13, 2015
|
Conduct of Government Business
by Agency Banks – Payment of Agency Commission
|
22.
|
DGBA.GAD.No.1636/31.12.010/2015-16
|
November 10, 2015
|
Payment of agency commission –
Certification of claims by external auditors
|
23.
|
DGBA.GAD.No.2278/31.12.010/2015-16
|
January 21, 2016
|
Payment of Agency Commission
on pension accounts
|
24.
|
DGBA.GBD.No.3262/31.02.007/2016-17
|
June 15, 2017
|
Period for Submission of
Agency Commission Claims
|
24.
|
DGBA.GBD.No.3333/31.02.007/2016-17
|
June 22, 2017
|
Payment of agency commission
for government receipts
|
25.
|
DGBA.GBD.No.3364/31.02.007/2016-17
|
June 29, 2017
|
Conduct of Government Business
by Agency Banks - Payment of Agency Commission
|
|