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The Reserve Bank of India issued a master circular on the conduct of government business by agency banks- payment of agency commission on 1st July 2020. In this article, we specify some of the essential points made in the master circular by the RBI.
As per the master circular transactions relating to the following government business undertaken by the agency banks are eligible for agency commission paid by RBI:
As per the master circular the following activities do not come under the purview of agency bank business and are therefore not eligible for payment of agency commission:
Agency banks that are authorized to collect GST are required to upload their luggage files in RBI’s QPX/E-Kuber on all days except on holidays. The state government transactions of the previous month reported after 8th of the succeeding month and those pertaining to earlier months must be reported to the Reserve Bank through a separate statement for accounting, after being confirmed by the competent authorities of concerned state governments.
For central government transactions or any adjustments thereof, if reported after a gap of ninety days from the date of transaction, agency banks require obtaining prior approval from concerned ministry/ department and submit the same separately to RBI at the time of reporting such transactions for settlement.
According to the agency bank agreement, the Reserve Bank pays agency commission at rates determined by it.
The rates are mentioned below:
The online transactions refer to those transactions involving remittance of funds from the bank account of the remitter through internet banking and such transactions that do not involve the physical receipt of cash/instruments at all like challan generated electronically and submitted to agency bank along with cash /instrument must be treated as a transaction under physical mode.
All agency banks are required to submit their claims for agency commission in the prescribed format to CAS (Central Accounts Section) Nagpur. However, agency commission claims with respect to the GST receipt transactions shall be settled at Mumbai Regional Office of RBI, and all agency banks authorized to collect GST are required to submit their agency commission claims pertaining to GST receipt transactions at Mumbai Regional office.
In case if the external auditor is also the concurrent auditor/ statutory auditor, claims can be certified by them. Moreover, agency banks are required to ensure that the agency banks’ internal inspectors/ auditors verify the agency commission claims submitted by their branches.
In case of eligible government transactions done from 1st July 2019, agency banks are required to submit the agency commission claims, including the GST amount applicable as per revised agency commission rates indicated above to RBI at respective ROs/CAS, Nagpur as per the extant instructions issued by the Reserve Bank of India. TDS on GST will be deducted as applicable by RBI at the time of making agency commission payment as per government instructions.
In case of eligible government transactions done by agency banks till June 30, 2019, agency banks will continue to submit agency commission claims and the centralized claims for ST/GST reimbursement as hitherto.
Agency banks must ensure that agency commission claims submitted to the Regional Office of RBI / Central Accounts Section, Nagpur as applicable in the prescribed format are accurate. Agency banks can also alert their concerned branches to ensure that agency commission claims submitted to RBI regional offices are accurate. If Such erroneous claims are certified by the Internal/ Concurrent auditors, it shall defeat the purpose of making such a requirement an essential condition for making quarterly claims.
Agency banks have been advised by the RBI to furnish their claim on agency commission to RBI within 60 days from the end of the quarter in which the transactions have been conducted. In the case where the banks fail to lodge the claims within the prescribed time period, they may forward the same to only RBI after providing the reasons for the delay.
According to the agreement that agency banks have with the RBI, violation or non-compliance of instructions issued by the government or the RBI shall attract the imposition of penalty. In case of breach of agreement or violation, the agency banks will submit the interest; rate prescribed by the banks and further shall have an additional interest rate of 2 % applicable.
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