Master Circular on Conduct of Government Business by Agency Banks - Payment of Agency Commission

RBI/2025-26/06 CO.DGBA.GBD.No.S2/31-12-010/2025-2026 April 1, 2025 All Agency Banks Madam / Dear Sir Master Circular on Conduct of Government Business by Agency Banks - Payment of Agency Commission Please refer to our Master Circular RBI/2024-25/07; CO.DGBA.GBD.No.S2/31-12-010/2024-2025 dated April 1, 2024 on the above subject. We have now revised and updated the Master Circular which consolidates important instructions on the subject issued by the Reserve Bank of India till March 31, 2025. 2. A copy of the revised Master Circular is enclosed for your information. This Circular may also be downloaded from our website https://mastercirculars.rbi.org.in . Yours faithfully (Indranil Chakraborty) Chief General Manager Encl: As above MASTER CIRCULAR ON AGENCY COMMISSION Introduction 1. The Reserve Bank of India carries out the general banking business of the Central and State Governments through its own offices and through the offices of the agency banks appointed under Section 45 of the RBI Act, 1934, by mutual agreement. RBI pays agency commission to the agency banks for the government business handled by them. This Master Circular consolidates the instructions contained in the circulars listed in Annex 1 . Government transactions eligible for agency commission 2. Transactions relating to the following government business undertaken by agency banks are eligible for agency commission paid by RBI: Revenue receipts and payments on behalf of the Central/State Governments Pension payments in respect of Central / State Governments and Any other item of work specifically advised by Reserve Bank as eligible for agency commission 3. The Agency banks also undertake the work related to Small Savings Schemes (SSS) the commission for which is borne by Government of India. Though the settlement of commission on such SSS is processed by RBI and settled at Central Accounts Section (CAS), Nagpur, the rates of agency commission related to SSS transactions are decided by Government of India. Agency commission claims on Special Deposit Scheme (SDS) related transactions (where mirror accounts are maintained in RBI) are also settled at CAS, Nagpur. 4. Short term/long term borrowings of State Governments raised directly from financial institutions and banks are not eligible for agency commission as these transactions are not considered to be in the nature of general banking business. Reserve Bank pays the agency banks separate remuneration as agreed upon for acting as agents for management of public debt. 5. Whenever agency banks collect stamp duty through physical mode or e-mode (challan based), they are eligible for payment of agency commission, provided the agency banks do not collect any charges from the members of public or receive remuneration from the State Government for doing this work. 6. If the agency bank is engaged by the State Government as Franking Vendor and it collects stamp duty from the public for franking the documents, it will not be eligible for agency commission since the State Government is paying commission to it as Franking Vendor. However, the agency bank which collects the stamp duty paid by the Franking Vendor for credit to the Treasury through challan in physical or e-mode for purchase of the franking bar, would be eligible for agency commission since it is a regular payment of Stamp Duty as stated above. Government transactions not eligible for agency commission 7. Agency banks paying their own tax liabilities through their own branches or through authorised branches of any other agency bank including State Bank of India or offices of Reserve Bank of India wherever they do not have their own authorised direct tax collection branch should indicate the same separately in the scroll. Such transactions will not be eligible for payment of agency commission. Banks should furnish a certificate to the effect that own tax liabilities (TDS, Corporation Tax, etc.) paid by them have been excluded while claiming agency commission. 8. The following activities, inter alia, do not come under the purview of agency bank business and are therefore not eligible for payment of agency commission. Furnishing of bank guarantees/security deposits, etc. through agency banks by government contractors/suppliers, which constitute banking transactions undertaken by banks for their customers. The banking business of autonomous/statutory bodies/Municipalities/ companies/ Corporations/Local Bodies. Payments which have been classified as capital in nature by government to cover losses incurred by autonomous/statutory bodies/ Municipalities/ Corporations/Local Bodies etc. Prefunded schemes which may be implemented by a Central Government Ministry/Department (in consultation with CGA) or a State Government Department through any bank. Transactions related to Gold Monetisation Scheme, 2015 Transactions arising out of Letters of Credit / Bank Guarantee opened by banks on behalf of Ministries/Departments etc. do not qualify for agency commission as RBI only reimburses the paid amount to the banks based on the mandate received from the governments. Any other item of work specifically advised by Reserve Bank or Central or State Government as ineligible for agency commission. 9. Agency Banks are advised to meticulously follow instructions issued by RBI from time to time regarding transactions which are not eligible for agency commission and submit their claims for agency commission accordingly. All agency banks while claiming agency commission should certify that no claim of agency commission is made on ineligible transactions. 10. Reporting of transactions by agency banks to RBI: After the operationalisation of NEFT 24X7 and RTGS 24X7, agency banks authorised to collect Goods and Service Tax (GST), Customs and Central Excise Duties through ICEGATE, Direct Taxes under TIN 2.0 channel shall upload their luggage files in RBI’s QPX/e-Kuber on all days except the Global holidays, which are January 26, August 15, October 2, all non-working Saturdays, all Sundays and any other day declared holiday by RBI for Government Transactions due to exigencies. It is to be ensured that these luggage files are uploaded in RBI’s QPX/e-Kuber on or before 1800 hours prescribed by Office of Principal Chief Controller of Accounts, Central Board of Indirect Taxes & Customs and Office of Principal Chief Controller of Accounts, Central Board of Direct Taxes. No extension in cut-off time will be allowed to agency banks by RBI beyond 1800 hours for uploading of these luggage files in QPX/e-Kuber. 11. The date of monthly balance transfer for the State Government transactions is 5th of the following month. The State Government transactions (electronic as well as in physical mode) of previous month reported after 4th of the succeeding month and those pertaining to earlier months should be reported to RBI through a separate statement for accounting, after being confirmed by the competent authorities of concerned State government. 12. For Central Government transactions (electronic as well as in physical mode) or any adjustments thereof, if reported after a gap of 90 days from the date of transaction, agency banks have to obtain prior approval from concerned Ministry/Department and submit the same to RBI separately at the time of reporting such transactions for settlement. Rates for agency commission 13. As per agency bank agreement, RBI pays agency commission at rates determined by it. The rates applicable with effect from July 1, 2019 are as under: Sr. No. Type of Transaction Unit Revised Rate a. (i) Receipts - Physical mode Per transaction ₹40/- (ii) Receipts - e-mode Per transaction ₹9/- b. Pension Payments Per transaction ₹75/- c. Payments other than Pension Per ₹100 turnover 6.5 paise per ₹100 14. In this context, the ‘Receipts-e-mode transactions’ indicated against Sr. No. a.(ii) in the above table refer to those transactions involving remittance of funds from the remitter’s bank account through Internet banking as well as such transactions which do not involve physical receipt of cash /instruments at all. For example, challan generated electronically and submitted to agency bank along with cash / instrument should be treated as transaction under physical mode. 15. With reference to the implementation of GST regime, it is advised that a single Common Portal Identification Number (CPIN), processed successfully leading to generation of a Challan Identification Number (CIN), under GST payment process, may be treated as a single transaction, even if multiple major head/sub major head/minor head of accounts are credited. This means that CGST, SGST, IGST and Cess etc. paid through a single challan would constitute a single transaction. Thus, all such records clubbed under a single challan i.e., CPIN have to be treated as a single transaction for the purpose of claiming agency commission effective July 1, 2017. 16. Similarly, in case of transactions not covered under GST, it is emphasised that a single challan (electronic or physical) should be treated as single transaction only and not multiple transactions, even if the challan contains multiple major head/sub major head/minor head of accounts that will get credited. Therefore, records clubbed under a single challan processed successfully have to be treated as a single transaction for the purpose of claiming agency commission. 17. Agency banks would be eligible to claim agency commission for pension transactions at the rate of ₹75 per transaction only when the entire work relating to disbursement of pension including pension calculation is attended to by them. If the work relating to pension calculations etc. is attended to by the concerned Government Department / Treasury and the banks are required only to credit the amount of pension to the pensioners' accounts maintained with them by a single debit to Government Account, such transaction is to be categorised under ‘other than pension payment’ and would be eligible for payment of agency commission @ 6.5 paise per ₹100/- turnover w.e.f. July 1, 2019. 18. The number of transactions eligible for payment of agency commission should not exceed 14 per pensioner per year. This includes one monthly credit for payment of net pension and a maximum of two per year for payment of arrears on account of increase in dearness relief, if applicable. Cases involving payment of arrears on account of late start/restart of pension qualifies as a single transaction for claiming of agency commission. In other words, any payment of arrears on account of late start/restart of pension should be treated as a single credit transaction and not as separate monthly credits. 19. Agency commission is payable to an agency bank at the full rate provided the transactions are handled by the bank at all stages. Where, however, the work is shared between two banks, the agency commission is shared between the banks in the proportion of 75:25. Thus, broadly, the agency commission is payable to the agency banks as detailed below: At the full rate, in cases where the transactions are handled by the bank at all stages, i.e., up to the stage of dispatch of scrolls and challans / cheques to the Pay and Accounts Offices, and treasuries/sub-treasuries. At 75% of the applicable rate, where the dealing branch is required to account for the transaction by passing on the scrolls and documents to the local/nearest branch of Reserve Bank of India or by any agency bank conducting government business. At 25% of the applicable rate, in the case of agency branch which received the scrolls and documents from dealing branches of other banks and is responsible for the accounting of these transactions and dispatching of the scrolls and documents to the Pay and Accounts Offices, Treasuries, etc. 20. All agency banks should settle their agency transactions for both funds and agency commission directly with the concerned Regional Office of Reserve Bank instead of routing them through any other agency bank that acts as aggregator in certain cases. So also, for payments made by all agency banks on behalf of State government/s get directly settled with the concerned Regional Office of RBI. Agency Transaction details/scrolls may be sent directly by individual agency bank to the concerned State Government/Treasury. This new arrangement for settlement of State government funds on day to day basis (receipts and payments) directly with Reserve Bank is with effect from January 1, 2018. Claiming agency commission 21. Agency banks are required to submit their claims for agency commission in the prescribed format (with GST details) to CAS Nagpur in respect of Central government transactions and the respective Regional Office of Reserve Bank of India for State Government transactions. However, agency commission claims with respect to GST receipt and transactions related to direct tax collection under TIN 2.0 regime, and transactions pertaining to collection of indirect taxes through ICEGATE reported to Mumbai Regional Office, RBI will be settled at Mumbai Regional Office of Reserve Bank of India only and accordingly all authorized agency banks are advised to submit their agency commission claims pertaining to the respective receipt transactions at Mumbai Regional Office only. The agency commission claim for Central Government transactions reported to CAS, Nagpur, RBI will be continued to be settled at CAS, Nagpur, RBI. The formats for claiming agency commission for all agency banks and separate and distinctive set of certificates to be signed by the branch officials and Chartered Accountants or Cost Accountants are given in Annex 2 , Annex 2A and Annex 2B respectively. These certificates would be in addition to the usual Certificate from ED / CGM (in charge of government business) to the effect that there are no pension arrears to be credited / delays in crediting regular pension / arrears thereof. 22. Where the External Auditor is also the Concurrent Auditor / Statutory Auditor, claims can be certified by such Concurrent Auditor / Statutory Auditor. In addition to this, agency banks are required to ensure that the agency bank’s internal inspectors / auditors verify the agency commission claims submitted by their branches and confirm their accuracy during the course of their inspection / audit. 23. Reference is also drawn to the instructions contained in our letter dated November 4, 2016 advising the process of claiming reimbursement of service tax (ST) on agency commission received for Central and State Government transactions, centrally from Reserve Bank of India at Central Accounts Section, Nagpur. The same process continued even after Service Tax got subsumed into the Goods and Service Tax (GST) framework. This process of centralised claims submission has been replaced with a system whereby applicable GST (18% at present) shall be paid along with agency commission by the respective Regional Offices of RBI / CAS, Nagpur as the case may be. 24. For eligible Government transactions done with effect from July 01, 2019, agency banks shall submit the agency commission claims, including applicable GST amount, as per revised agency commission rates indicated above, to RBI at respective ROs / CAS, Nagpur as per the extant instructions issued by RBI in this regard. TDS on GST shall be deducted as applicable by RBI at the time of making agency commission payment in accordance with Government instructions in the matter. 25. However, for eligible Government transactions done by agency banks upto June 30, 2019, agency banks shall continue to submit agency commission claims as well as the centralized claims for ST/GST reimbursement as hitherto. 26. Agency banks are required to ensure that agency commission claims submitted to the Regional Offices of Reserve Bank of India / Central Accounts Section, Nagpur as applicable in the prescribed format are accurate. Agency banks may also alert their branches concerned to ensure that agency commission claims submitted to our Regional Offices are accurate. Such erroneous claims, if certified by the Internal / Concurrent Auditors, will defeat the very purpose of making such requirement an essential condition for making quarterly claims. 27. Agency banks are advised to furnish their claim on agency commission to Reserve Bank within 60 calendar days from the end of the quarter in which the transactions have been conducted. If the banks fail to lodge the claims within the stipulated period mentioned above, they may forward the same to RBI, only after giving reasons for delay. Penal interest for wrong claims 28. As per the agreement that agency banks have with RBI, violation or non-compliance of instructions issued by Government or Reserve Bank shall attract imposition of penalty. Agency banks will be liable to pay penal interest at Bank Rate as notified by Reserve Bank of India plus 2% for any wrong claims of agency commission settled. Annex 1 List of circulars consolidated in the Master Circular No. Circular No. Date Subject 1. DGBA.GAD.No.H-190/31.12.010/2003-04 September 14, 2003 TDS on Agency Commission will not be effected by RBI 2. DGBA.GAD.No.H-41/42.02.001/2003-04 July 22, 2004 Scheme for acceptance of Income and other direct taxes (Central Government) and Profession tax/other taxes of State Governments through agency banks. 3. DGBA.GAD.No.H-1225-1258/42.02.001/2004-05 October 27, 2004 Scheme for acceptance of Income and other direct taxes (Central Government) and Profession tax/other taxes of State Governments through agency banks 4. DGBA.GAD.No.H-2625-2658/31.12.010(C)/2004-05 December 17, 2004 Remuneration for conduct of Government business by agency banks – Payment of Turnover Commission 5. DGBA.GAD.No.H-3568-3601/42.01.001/2004-05 January 13, 2005 Scheme for acceptance of Income and other direct taxes (Central Government) and Profession tax/other taxes of State Governments through agency banks 6. DGBA.GAD.No.H-4530/31.12.010(C)/2005-06 October 27, 2005 Agency Commission claims submitted by agency banks – common irregularities 7. DGBA.GAD.No.H-11136/31.12.010(C)/2005-06 January 31, 2006 Agency Commission claims submitted by agency banks – common irregularities 8. DGBA.GAD.No.H-13118/31.12.010(C)/2005-06 March 2, 2006 Agency Commission claims submitted by agency banks – common irregularities 9. DGBA.GAD.No.H.13034/31.12.010(C)/2006-07 February 27, 2007 Agency Commission on pension transactions 10. DGBA.GAD.H-1800/31.12.010(C)/2009-10 August 21, 2009 Abnormal increase in agency commission claims 11. DGBA.GAD.H-3903/31.12.010(C)/2009-10 November 11, 2009 Agency Commission claims to be certified by the External Auditor / Chartered Accountant 12. DGBA.GAD.No.H.160/31.12.010(C)/2010-11 July 7, 2010 Agency Commission claims to be certified by the External Auditor 13. DGBA.GAD.No.H-670/31.12.010(C)/2010-11 March 24, 2011 TDS on Agency Commission will not be effected by RBI 14. DGBA.GAD.No.H-8852/31.12.010(C)/2010-11 June 21, 2011 Payment of agency commission on collection of Registration fee and Stamp Duty 15. DGBA.GAD.No.7575/31.12.011/2011-12 May 22, 2012 Agency Commission on pension transactions 16. DGBA.GAD.No.H.2529/31.12.010(C)/2012-13 October 31, 2012 Conduct of Government Business by Agency Banks – Payment of Agency Commission – Revised Format for claiming agency commission by banks-Implementation of Working Group recommendations 17. DGBA.GAD.No.H-2995/31.12.010/2014-15 January 7, 2015 Payment of agency commission – Certification of claims by external auditors 18. DGBA.GAD.No.617/31.12.010(C)/2015-16 August 13, 2015 Conduct of Government Business by Agency Banks – Payment of Agency Commission 19. DGBA.GAD.No.1636/31.12.010/2015-16 November 10, 2015 Payment of agency commission – Certification of claims by external auditors 20. DGBA.GAD.No.2278/31.12.010/2015-16 January 21, 2016 Payment of Agency Commission on pension accounts 21. DGBA.GBD.No.3262/31.02.007/2016-17 June 15, 2017 Period for Submission of Agency Commission Claims 22. DGBA.GBD.No.3333/31.02.007/2016-17 June 22, 2017 Payment of agency commission for government receipts 23. DGBA.GAD.No.2294/15.04.001/2016-17 March 6, 2017 Gold Monetisation Scheme 24. DGBA.GAD.No.1007/15.04.001/2017-18 October 17, 2017 Gold Monetisation Scheme, 2015 25. DGBA.GBD.No.1324/31.02.007/2017-18 November 16, 2017 Agency Commission for GST receipt transactions 26. DGBA.GBD.1472/31.02.007/2017-18 November 30, 2017 Reporting of Transactions by agency banks to RBI 27. DGBA.GBD.No.1498/31.02.007/2017-18 December 7, 2017 Settlement of Agency transactions in certain cases (for Funds and Agency Commission) directly from Reserve Bank of India 28. RBI/2018-19/16 DGBA.GBD.No.87/31.02.007/2018-19 July 12, 2018 Period for Submission of Agency Commission Claims 29. DGBA.GBD.No.1590/44.02.001/2018-19 December 24, 2018 Payment of Agency commission to Agency Banks – Applicability of TDS provision under GST. 30. DGBA.GBD.No.1870/44.02.001/2018-19 January 23, 2019 Payment of Agency commission to Agency Banks – Applicability of TDS provision under GST. 31. DGBA.GBD.No.3144/31.02.007/2018-19 June 20, 2019 Rationalisation and Revision of Agency Commission Payable to Banks on Government Transactions 32. DGBA.GBD.No.5/31.02.007/2019-20 July 31, 2019 Agency Commission - Furnishing reconciliation certificate 33. DGBA.GBD.No.648/31.12.007/2019-20 September 25, 2019 Agency Commission - Furnishing reconciliation certificate 34. CO.DGBA.GBD.No.S957/43-33-005/2022-2023 November 14, 2022 Agency Commission for Direct Tax collection under TIN 2.0 regime 35. CO.DGBA.GBD.No.S295/31-12-010/2023-2024 June 14, 2023 Agency Commission for collection of indirect taxes through ICEGATE payment gateway 36. CO.DGBA.GBD.No.S1234/31-12-010/2023-2024 March 13, 2024 Cut-off time for uploading of GST, ICEGATE and TIN 2.0 luggage files