RBI/2016-17/330
DGBA.GBD.No.3364/31.02.007/2016-17

June 29, 2017

All Agency Banks

Dear Sir / Madam,

Conduct of Government Business by Agency Banks – Payment of Agency Commission

Please refer to Circular No.DGBA.GAD.617/31.12.010 (C)/2015-16 dated August 13, 2015 on the captioned subject, wherein government transactions not eligible for agency commission are discussed.

2. In partial modification to the above circular, it is clarified that the following activities 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/ Corporations/Local Bodies.

3. Payments of a capital nature such as capital contributions/subsidies/grants made by governments to cover losses incurred by autonomous/statutory bodies/ Municipalities/ Corporations/Local Bodies.

4. Prefunded schemes which may be implemented by a Central Government Ministry/Department (in consultation with CGA) and a State Government Department through any bank.

Yours faithfully,

(Partha Choudhuri)
General Manager