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

RBI issued the Master Circular on Conduct of Government Business by Agency Banks – Payment of Agency Commission

The following has been stated 

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.

Government transactions eligible for agency commission

Transactions relating to the following government business undertaken by agency banks are eligible for agency commission paid by RBI:

  1. Revenue receipts and payments on behalf of the Central/State Governments
  2. Pension payments in respect of Central / State Governments and
  3. Any other item of work specifically advised by Reserve Bank as eligible for agency commission

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.Government transactions not eligible for agency commission

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.

  1. Furnishing of bank guarantees/security deposits, etc. through agency banks by government contractors/suppliers, which constitute banking transactions undertaken by banks for their customers.
  2. The banking business of autonomous/statutory bodies/Municipalities/ companies/ Corporations/Local Bodies.
  3. Payments which have been classified as capital in nature by government to cover losses incurred by autonomous/statutory bodies/ Municipalities/ Corporations/Local Bodies etc.
  4. Prefunded schemes which may be implemented by a Central Government Ministry/Department (in consultation with CGA) or a State Government Department through any bank.
  5. Transactions related to Gold Monetisation Scheme, 2015
  6. 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.
  7. Any other item of work specifically advised by Reserve Bank or Central or State Government as ineligible for agency commission.

Link – https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12812&Mode=0

About the Author

Leave a Reply

Your email address will not be published. Required fields are marked *

You may also like these

Skip to content