RBI/2018-19/2
DGBA.GBD.No.2/31.12.010/2018-19
July
2, 2018
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/2017-18/2 dated July 1, 2017 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, 2018.
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
(Charulatha S. Kar)
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.
Public
Provident Fund (PPF) Scheme, 1968
d.
Special
Deposit Scheme (SDS) 1975
e.
National
Saving Time Deposit Scheme, 1981,
f.
National
Saving Recurring Deposit Scheme, 1981
g.
National
Saving (Monthly Income Account) Scheme, 1987,
h.
National
Saving Certificates (VIII Issue) Scheme, 1989
i.
Senior
Citizen Savings Scheme (SCSS), 2004
j.
Kisan
Vikas Patra, 2014 and
k.
Sukanya
Samriddhi Account
l.
Any
other item of work specifically advised by Reserve Bank as eligible for
agency commission (viz. Relief Bonds/ Savings Bonds etc. transactions)
The Agency banks also undertake
the work related to Small Savings Schemes the commission for which is borne
by Government of India. However, the settlement of such commission
continues to be processed by RBI. Agency commission claims on SDS related transactions
(where mirror accounts are maintained in RBI) are settled at Central
Accounts Section (CAS), Nagpur and not in respective Regional Offices of
RBI.
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 as RBI
only reimburses the paid amount to the banks based on the mandate received
from the governments.
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.
Government transactions not
eligible for agency commission
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.
8. 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/ companies/ 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.
(e) Transactions related to Gold
Monetisation Scheme 2015
Reporting of transactions by
agency banks to RBI
9. State government transactions
(electronic as well as in physical mode) of previous month reported after
8th of the succeeding month and those pertaining to earlier months should
be reported to RBI through a separate statement for accounting, after being
confirmed by the competent authorities of concerned state government.
10. For Central Government
transactions (electronic as well as in physical mode) or any adjustments
thereof, if reported after a gap of 90 days from the date of transaction,
agency banks have to obtain prior approval from concerned
ministry/department and submit the same to RBI separately at the time of
reporting such transactions for settlement.
Rates for agency commission
11. As per 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
|
12. 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.
13. 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 effective July 1, 2017.
14. 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.
15. 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 banks 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.
16. 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.
17. 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.
18. All agency banks should
settle their agency transactions for both funds and agency commission
directly with the concerned Regional Office of Reserve Bank instead of
routing them through any other agency bank that acts as aggregator in
certain cases. So also for payments made by all agency banks on behalf of
state government/s get directly settled with the concerned Regional Office
of RBI. Agency Transaction details/scrolls may be sent directly by
individual agency bank to the concerned State Government/Treasury. This new
arrangement for settlement of state government funds on day to day basis
(receipts and payments) directly with Reserve Bank is with effect from
January 1, 2018.
Claiming agency commission
19. 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.
However, agency commission claims with respect to GST receipt transactions
will be settled at Mumbai Regional Office of Reserve Bank of India only and
accordingly all agency banks, authorized to collect GST, are advised to
submit their agency commission claims pertaining to GST receipt
transactions at Mumbai Regional Office only. 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.
20. 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.
21. Agency banks are required to
ensure that agency commission claims submitted to the Regional Offices of
Reserve Bank of India / Central Accounts Section, Nagpur as applicable 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.
22. Agency banks are advised to
furnish their claim on agency commission to Reserve Bank within 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 to RBI only after giving reasons
for delay.
Other issues
23. RBI has decided to reimburse
agency banks the amount of Service Tax paid by them on agency commission
with effect from July 1, 2012 and the amount of GST paid by them on agency
commission with effect from July 1, 2017.
24. The reimbursement of MDR
charges on debit card use (up to Rs.one lakh) can be claimed from RBI
separately as per extant guidelines. Deduction of MDR charges from the
receipts of government is not permissible. The full amount paid to the
Government by the customers / through debit / credit cards should be
remitted to the concerned Government Ministry / Department. The MDR charges
on debit card transactions above Rs.one lakh are not being absorbed by
Government of India and hence will not be reimbursed by RBI. MDR charges on
any credit card transaction are not eligible for reimbursement by RBI.
The reimbursement of MDR charges
on debit cards / BHIM – UPI transactions of value less than or equal to ?
2000/- will be borne by Government of India and the claims for
reimbursement will be settled by Central Accounts Section, RBI, Nagpur.
Deduction of TDS on Agency
Commission
25. 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
26. 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
|
25.
|
DGBA.GBD.No.3333/31.02.007/2016-17
|
June 22, 2017
|
Payment of agency commission
for government receipts
|
26.
|
DGBA.GAD.No.2294/15.04.001/2016-17
|
March 6, 2017
|
Gold Monetisation Scheme
|
27.
|
DGBA.GAD.No.505/31.02.007/2017-18
|
September 07, 2017
|
Reimbursement of Merchant
Discount Rate
|
26.
|
DGBA.GAD.No.1007/15.04.001/2017-18
|
October 17, 2017
|
Gold Monetisation Scheme, 2015
|
27.
|
DGBA.GBD.No.1324/31.02.007/2017-18
|
November 16, 2017
|
Agency Commission for GST
receipt transactions
|
28.
|
DGBA.GBD.1472/31.02.007/2017-18
|
November 30, 2017
|
Reporting of Transactions by
agency banks to RBI
|
29.
|
DGBA.GBD.No.1498/31.02.007/2017-18
|
December 7, 2017
|
Settlement of Agency
transactions in certain cases (for Funds and Agency Commission) directly
from Reserve Bank of India
|
30.
|
DGBA.GBD.No.1972/15.02.005/2017-18
|
February 01, 2018
|
Small Saving Schemes – Payment
of Agency Commission
|
31.
|
DGBA.GBD.No.2294/15.01.001/2017-18
|
March 15, 2018
|
Agency Commission payable to
banks for operating Special Deposit Scheme (SDS)
|
32.
|
DGBA.GBD.No.2773/43.33.001/2017-18
|
May 04, 2018
|
Reimbursement of MDR charges
on debit cards / BHIM – UPI transactions of value less than or equal to ?
2000/-
|
|