What changed
RBI issued a master circular updating agency commission rates for government business handled by agency banks. The revised structure, effective July 1, 2012, increases commission for physical receipts and pension payments but reduces it for e-mode receipts and non-pension payments. Additionally, for PPF and SCSS schemes, RBI will now pay agency commission at the same revised rates, replacing separate government remuneration.
What it means for you
Banks will see higher per-transaction income for physical receipts and pension payments, but significantly lower commission for e-mode receipts and non-pension payments. This incentivizes digital transactions by reducing costs for the government, while banks must adjust their revenue expectations and operational focus. The consolidation of PPF and SCSS remuneration under RBI simplifies the payment structure but may reduce overall earnings from these schemes.
What you must do
- Update internal systems and fee schedules to reflect the new commission rates effective July 1, 2012.
- Train staff on revised rates for physical receipts, e-mode receipts, pension payments, and other payments.
- Review and adjust revenue projections for government business, especially for e-mode and non-pension transactions.
- Ensure compliance with the new single-channel payment for PPF and SCSS, discontinuing separate government remuneration.
Who it affects
All agency banks handling government transactions, Branches processing receipts, pension payments, and other government payments, Treasury and operations teams managing government business, Finance departments forecasting commission income
What is the new commission for e-mode receipts?
The commission for e-mode receipts is reduced to ₹12 per transaction from the earlier ₹45, effective July 1, 2012.
How are PPF and SCSS transactions affected?
From July 1, 2012, RBI will pay agency commission on PPF and SCSS transactions at the same revised rates (₹50 physical, ₹12 e-mode receipts; 5.5 paise per ₹100 turnover for payments), and the Government of India will stop separate remuneration.
Are short-term borrowings of state governments eligible for agency commission?
No, short-term and long-term borrowings of state governments raised directly from financial institutions and banks are not eligible for agency commission as they are not considered general banking business.