RBI/2004/305
DGBA.GAD.No.H-2625-2658/31.12.010(C)/2004-05
December 17, 2004
The Chairman & Managing Directors/
Managing Directors
All Agency Banks including Jammu & Kashmir Bank Ltd
(As per list)
Dear Sir,
Remuneration for Conduct of Government
business by Agency Banks - Payment of Turnover Commission (ToC)
As you are aware, Reserve Bank
acts as banker to the Central and State Governments in terms of Section 20,
21 and 21A of the Reserve Bank of India Act, 1934. The Bank has appointed your
bank as its agent for conduct of Government business. In terms of the agency
agreement, your bank is entitled for remuneration in the form of Turnover Commission
(ToC).
2. Of late, we have been receiving
references as to whether a particular transaction carried out on behalf of Central/State
Government Departments by agency banks is eligible for ToC or not. We clarify
that the following items of
Government business will only qualify
for payment of ToC:
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Sr.No.
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Items of work
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i.
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Revenue Receipts and Payments
on behalf of the Central/State Governments.
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ii.
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Pension Payments in respect
of Central Government and State Governments.
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iii.
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Payments made by banks to
account holders under Compulsory Deposit Scheme(ITP).
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iv.
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Special Deposit Scheme (SDS)
1975, Public Provident Fund (PPF).
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v.
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Any other item of work specifically
advised by Reserve Bank as eligible for ToC (viz. Relief Bonds/Savings
Bonds etc. transactions).
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3. It is further clarified that
short term/long term borrowings of State Governments raised directly from financial
institutions and banks etc. are not eligible for ToC as these transactions are
not entered into by banks as our agents. Reserve Bank pays the agency banks
separate remuneration as agreed upon for acting as agents for management of
Public Debt. We reiterate that transactions arising out of Letter of Credit
(L/C) opened by banks on behalf of Ministries/Departments etc. will not qualify
for ToC.
4. We also advise that in future
all agency banks, while claiming turnover commission should certify that no
claim of ToC is made on ineligible transactions.
5. Please acknowledge receipt.
Yours faithfully,
(M.T. Varghese)
General Manager
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