What changed
This is an updated master circular replacing the July 1, 2010 version, consolidating all current instructions up to June 30, 2011. No new policy changes were introduced; it merely compiles existing directives for easier reference.
What it means for you
Agency banks must ensure strict adherence to the consolidated procedures for broker enrollment, delisting, and brokerage payments. The circular reinforces that banks are solely responsible for sub-agents' actions and must not imply RBI endorsement. Brokerage claims must be settled within 30 days, and banks can seek reimbursement from RBI after paying brokers.
What you must do
- Follow the simple enrollment procedure for brokers and assign a unique broker code for all applications.
- Ensure sub-agents do not use RBI's name in publicity; you are fully liable for their activities.
- Delist brokers with no business for 2 years after proper notice.
- Pay brokerage at 1% per ₹100 within 30 days, without TDS, and consider monthly ECS payments.
- Settle brokerage claims first, then seek reimbursement from RBI's CAS Nagpur.
Who it affects
State Bank of India and associate banks, 17 nationalized banks, Axis Bank, ICICI Bank, IDBI Bank, HDFC Bank, Stock Holding Corporation of India Ltd, All agency banks handling Relief/Savings Bonds
What is the brokerage rate for Savings Bonds?
Brokerage is 1% (₹1 per ₹100) paid to registered brokers on applications bearing their stamp. No brokerage is payable if the broker is also an investor.
Do we need to deduct TDS on brokerage payments?
No, as per Section 194(H) of the Income Tax Act, 1961, no TDS is required on brokerage for Savings Bonds business.
How quickly must we settle brokerage claims?
Brokerage claims must be settled within 30 days from the date of subscription. You should pay brokers first and then seek reimbursement from RBI.