What changed
The master circular consolidates and updates previous instructions on agency commission payable to banks for conducting government business. It shifts commission from a turnover-based to a transaction-based model for receipts and pension payments, effective July 1, 2005. For PPF and SCSS, RBI now pays agency commission directly, with Government of India discontinuing separate remuneration; any prior GoI payments will be recovered by RBI.
What it means for you
Banks must adapt their record-keeping to track transactions per branch scroll for claiming commission, as error scrolls are ineligible. The transaction-based model may alter revenue streams from government business, especially for high-volume low-value receipts. Service quality monitoring, particularly for pensioners, will be stricter, requiring banks to ensure efficient pension disbursement.
What you must do
- Maintain detailed records of daily branch scrolls for receipts and pension transactions to claim commission accurately.
- Ensure error scroll transactions are excluded from commission claims and submit prescribed certificates for own tax liability transactions.
- Submit PPF and SCSS commission claims in prescribed formats (Annex I, II, III) including arrears due up to March 31, 2007, by June 10, 2007.
- Monitor service quality for pension payments as RBI will emphasize this area.
- Update internal systems to handle transaction-based commission calculation for receipts and pension payments.
Who it affects
All agency banks handling government business, Banks managing PPF and SCSS transactions, Bank branches processing government receipts and payments, Pension disbursement departments of banks
What is the agency commission rate for pension payments?
Pension payments attract a commission of Rs.60 per transaction, effective from July 1, 2005.
Are error scroll transactions eligible for agency commission?
No, transactions reported in error scrolls are not eligible for agency commission.
How should banks claim commission for PPF and SCSS transactions?
Banks must submit claims in the formats specified in Annex I, II, and III of the circular, with arrears due up to March 31, 2007, submitted by June 10, 2007.