What changed
This is a master circular consolidating all prior instructions up to June 30, 2012, replacing the July 1, 2011 version. No new policy changes were introduced; it merely compiles existing rules for easier reference.
What it means for you
Banks must follow a simple enrollment process for brokers and ensure sub-agents do not use RBI's name. Brokerage is fixed at Re 1 per Rs 100, with no TDS applicable. Claims must be settled within 30 days, and banks can pay monthly via ECS. Dormant brokers (no business for 2 years) should be delisted after notice.
What you must do
- Enroll brokers using a simple procedure and assign a unique code number.
- Ensure any sub-agents appointed do not use RBI's name in publicity.
- Delist brokers dormant for 2 years after giving due notice.
- Pay brokerage at Re 1 per Rs 100, settle claims within 30 days, and consider monthly ECS payments.
- Do not deduct TDS on brokerage payments as per Section 194(H) of Income Tax Act.
Who it affects
Agency banks handling Relief/Savings Bonds, Brokers and sub-agents enrolled for bond business, State Bank of India and Associates, All Nationalized banks (Excluding Punjab and Sind Bank & Andhra Bank), Axis Bank Ltd., ICICI Bank Ltd., HDFC Bank Ltd., Stock Holding Corporation of India Ltd. (SHCIL)
What is the brokerage rate for Relief/Savings Bonds?
Brokerage is Re 1 per Rs 100 invested in Bond Ledger Account (BLA) at designated branches, provided the broker is not an investor.
Is TDS applicable on brokerage payments?
No, agency banks are not required to deduct TDS on brokerage for Relief/Savings Bonds under Section 194(H) of the Income Tax Act.
How quickly must brokerage claims be settled?
Claims must be settled within 30 days from the date of subscription. Banks should pay first and then seek reimbursement from RBI.