What changed
RBI merged the 2007 master circulars on broker appointment/delisting and brokerage payment into a single updated circular as of July 1, 2008. The new circular consolidates all operative instructions, including simplified broker enrollment procedures, delisting of dormant brokers after two years, and brokerage rates of Re. 0.50 (paise fifty only) per Rs.100 at RBI offices and Rs. 1.00 (Rupee One only) per Rs.100 at agency banks.
What it means for you
Agency banks must follow a single, streamlined set of rules for broker management, reducing compliance complexity. Banks are held fully responsible for any sub-agents they appoint and must ensure RBI's name is not misused. The 30-day brokerage settlement requirement tightens operational discipline, and no TDS applies on brokerage payments under Section 194(H) of the Income Tax Act.
What you must do
- Adopt the simplified broker enrollment process: accept requests on business letterhead with business data and allot a unique broker code.
- Ensure any sub-agents appointed do not use RBI's name in publicity; take full responsibility for their actions.
- Delist brokers with no fresh business for two years after giving due notice.
- Settle brokerage claims within 30 days of subscription before seeking reimbursement from RBI.
- Do not deduct TDS on brokerage payments for Savings Bonds business in terms of Section 194(H) of the Income Tax Act, 1961.
Who it affects
State Bank of India and associate banks, 17 nationalized banks, ICICI Bank, IDBI Bank, HDFC Bank, Axis Bank, Stock Holding Corporation of India Ltd, All agency banks handling Relief/Savings Bonds, Brokers enrolled with RBI offices or agency banks
What is the brokerage rate for brokers registered with agency banks?
Brokers registered with agency banks receive Rs. 1.00 (Rupee One only) per Rs.100 on applications tendered in BLA form at designated branches. No brokerage is paid if the broker is also an investor/applicant.
How quickly must brokerage claims be settled?
Brokerage claims must be settled within 30 days from the date of subscription. Agency banks should first pay the broker and then seek reimbursement from RBI.
Can agency banks appoint other banks as sub-agents for Savings Bonds?
Yes, but the appointing bank is solely responsible for the sub-agent's activities. The sub-agent must not use RBI's name in any publicity material or billboards.