What changed
RBI issued a Master Circular bringing together all previous circulars on brokerage rates and payment procedures for Relief/Savings Bonds. The circular does not introduce new rates or rules but serves as a single reference document for agency banks and RBI offices.
What it means for you
Banks and agency institutions now have a consolidated source for brokerage rules, reducing confusion from multiple circulars. The fixed brokerage rates (Re 0.50 for RBI-office brokers, Re 1 for agency bank brokers) remain unchanged. The circular reinforces timely settlement (within 30 days) and promotes monthly ECS payments to brokers.
What you must do
- Ensure brokerage claims are settled within 30 days of subscription.
- Pay brokerage via monthly ECS credit to brokers' accounts after obtaining mandates.
- Do not deduct TDS on brokerage payments for Savings Bonds as per Section 194(H) of IT Act.
- Submit Appendix IV to CAS Nagpur for final 10% brokerage settlement.
- Refer to this Master Circular for all operative instructions; keep it accessible to relevant staff.
Who it affects
State Bank of India and associate banks, 17 nationalized banks, ICICI Bank, IDBI Bank, HDFC Bank, UTI Bank, Stock Holding Corporation of India Ltd, Brokers registered with RBI offices or agency banks, RBI offices handling Savings Bonds
What are the brokerage rates for Savings Bonds under this Master Circular?
Brokers registered with RBI offices get Re 0.50 per Rs 100 for BLA applications; brokers registered with agency banks get Re 1 per Rs 100. No brokerage is paid for stock certificates or if the broker is also an investor.
Is TDS applicable on brokerage payments for Savings Bonds?
No. As per Section 194(H) of the Income Tax Act, 1961, no TDS is required on brokerage payments for Savings Bonds business.
How should brokerage claims be settled?
Claims must be settled within 30 days of subscription. Agency banks should pay brokers first and then seek reimbursement from RBI. Monthly ECS credit to brokers' accounts is encouraged. For CAS Nagpur, 90% is paid on the 3rd working day of the next month; the remaining 10% after submitting Appendix IV.