What changed
RBI issued a Master Circular updating all operative instructions on broker appointment, delisting, and brokerage payment for Relief/Savings Bonds as of June 30, 2009. It consolidates earlier circulars from 2000-2004 into one reference document for agency banks and Public Debt Offices.
What it means for you
Agency banks now have a single, updated source for broker management rules, reducing confusion from multiple circulars. The circular reinforces that banks are fully liable for sub-agents' actions and must not let them use RBI's name. Brokerage rates remain unchanged at Re. 0.50 per Rs.100 for RBI offices and Rs. 1.00 per Rs.100 for agency bank branches, with no TDS applicable.
What you must do
- Adopt the simplified enrollment procedure for brokers, requiring only a request on letterhead and business data.
- Ensure any sub-agents or other banks engaged as brokers do not use RBI's name in publicity; take full responsibility for their activities.
- Delist brokers dormant for 2 years after giving due notice, if no fresh business is forthcoming.
- Settle brokerage claims within 30 days of subscription, and seek reimbursement from RBI only after paying the broker.
- Do not deduct TDS on brokerage payments, as per Section 194(H) of the Income Tax Act, 1961.
Who it affects
Agency banks handling Relief/Savings Bonds (SBI, associate banks, 17 nationalized banks, ICICI, IDBI, HDFC, Axis), Stock Holding Corporation of India Ltd, Brokers enrolled with RBI offices or agency banks, Public Debt Offices
What is the brokerage rate for Savings Bonds?
Brokerage is Re. 0.50 per Rs.100 for applications at RBI offices, and Rs. 1.00 per Rs.100 for applications at designated branches of agency banks. No brokerage is paid for stock certificates or if the broker is also an investor.
Can agency banks appoint other banks as sub-agents?
Yes, but the appointing agency bank is solely responsible for the sub-agent's activities. The sub-agent must not use RBI's name in any publicity or billboards.
Is TDS applicable on brokerage payments?
No, as per Section 194(H) of the Income Tax Act, 1961, no tax is to be deducted at source on brokerage for Savings Bonds business.