This page is informational and is not legal advice. It describes rules, orders and rulings as published or reported on the dates shown; read the primary text before relying on any of it.
A pigmy collection round is eight steps long, and the steps are the same whether the record is a carbon book or an Android app. An institution appoints an agent on commission. A member opens an account and gets a passbook. The agent walks a fixed route and collects cash. A receipt is issued at the door. Cash and records return to the branch that evening. The branch reconciles agent-wise and member-wise and posts to core banking. Commission is computed on what was collected. The account matures, or is closed early with a penalty.
What differs between institutions is not the sequence. It is how long the branch stays blind between the receipt and the posting. That gap is where nearly every failure in a pigmy deposit scheme lives.
Step 1: Who is allowed to knock
The rules depend on what kind of institution it is, and this matters more than most vendor pages admit.
For urban co-operative banks, the RBI's Branch Authorisation Directions, 2025 (RBI/DOR/2025-26/271, 4 December 2025) draw a hard line: "Tier 3 and 4 UCBs may offer doorstep banking services to customers either directly through its own employees or through agents." It then provides that "Tier 1 and 2 UCBs shall offer doorstep banking services only through their permanent employees." On its face a small UCB is not allowed a commission agent on the route at all, though whether supervisors read a legacy pigmy scheme as the doorstep banking service that chapter defines is not something we found settled in published guidance; we set out the question in the rules behind pigmy collection. Cosmos Bank's pigmy page describes collection by authorised bank personnel rather than by agents, which fits that frame.
Either way the scheme needs board approval, and the policy must cover selection of agents, fee and commission, cash limits for employees, agents and customers, and any charges levied on the customer, which must be shown on the bank's website. The agreement with the member must state that the bank "will be responsible for the acts of omission and commission of its 'agent'". The RBI's doorstep banking circular of 8 June 2022 (RBI/2022-23/66) set the same conditions.
Agents are paid commission, not salary. That is a deliberate carve-out: banks are otherwise barred from paying commission or brokerage on deposits, and Canara Bank's deposit policy lists the one relevant exception as "commission paid to agents employed to collect door-to-door deposits under a special scheme".
Where this is unsettled. In an April 2026 matter involving Karnataka Vikas Grameena Bank, the Karnataka High Court held that pigmy agents are employees of the bank and not business facilitators, so GST was not leviable on their commission. The tax position and the contractual position now point in opposite directions.
District central co-operative banks, Souharda co-operatives, patpedhis and Nidhi companies fall outside the UCB tier rule. They operate under their state co-operative acts or the Nidhi Rules, and their agent arrangements vary.
Step 2: Opening the account
Account opening is ordinary KYC. Chikkamagaluru DCC Bank asks for an application form, two passport-size photographs, an Aadhaar copy, PAN and an address proof, and supplies the passbook free the first time; nomination is available and minors may hold accounts. Cosmos Bank asks for identity and address proof plus two photographs.
The doorstep rules let KYC documents be submitted at the door rather than at the counter, with an acknowledgment issued, and the agreement must name the address, residence or office, where the service will be delivered.
Step 3: The daily route
The agent walks a fixed round, usually a market street, a fishing jetty or a cluster of small shops, and collects whatever the member can give that day. The amounts are set by the scheme, not by the agent.
| Institution | Type | Amount accepted | Tenure | Interest (checked 2026-09-09) |
|---|---|---|---|---|
| Canara Bank, Nitya Nidhi | Public sector bank | Min ₹50/month; max ₹1,000/day, ₹30,000/month | 63 months | 2.00%, w.e.f. 01.10.2022 |
| Cosmos Bank | Urban co-operative bank | ₹100 to ₹5,000/day | 12 months | 3.00% |
| Latur Urban Co-op Bank | Urban co-operative bank | From ₹10/day, daily, weekly or monthly | 12, 24 or 36 months | 2% after 1 yr, 3% to 2 yrs, 5% for 3 yrs |
| Chikkamagaluru DCC Bank | District central co-op bank | Min ₹100, no ceiling | 12 to 60 months | 1% |
Canara's cap has teeth. Its deposit policy sets ₹1,000 a day and ₹30,000 a month as hard limits and adds that "No interest and commission shall be paid beyond this limit" — so an over-collection earns the member nothing and pays the agent nothing.
Step 4: The receipt, in three technology tiers
RBI is explicit here: cash collected must be acknowledged "by issuing a receipt on behalf of the bank", and the customer must be told the date the credit will appear. How that receipt is produced is where institutions genuinely diverge.
| Tier | What the member gets | When the branch finds out | Failure mode |
|---|---|---|---|
| Passbook and carbon book | Handwritten passbook entry and a carbon copy | When the agent returns that evening | Illegible amounts, missed entries, entries against the wrong member |
| Handheld thermal printer | A printed slip at the door | End of day for most units; live only where a GPRS module is fitted and has signal | Device or roll failure; the slip is the only proof until sync |
| Smartphone app | App entry plus an SMS or WhatsApp confirmation, and a printed slip where a printer is paired | Immediately when online; on sync when the queue clears | Nothing at the door if the phone dies; disputes if the SMS never arrives |
The middle tier is a commodity, not a branded product line, and "pigmy collection machine" listings cover units of quite different shapes. One lists a 58 mm thermal line printer, an LCD, a keypad, a battery quoted at up to eight hours, USB, Ethernet or GPRS connectivity and room for over 100,000 stored transactions — but also a 2.5 kg countertop body, which is not a device anyone walks a route with. Softland India lists a field-collection unit with embedded "PAY COLLECT" firmware; Visiontek's VA-21, a PCI and STQC certified terminal, names pigmy collection agencies among its field-executive uses. Check the weight and the battery before the feature list.
Several vendors sell the app tier. IndiConnect describes GPS-enabled, offline-capable collection with receipts by SMS or WhatsApp and automatic flagging of duplicates, mismatches and missing deposits. ezPigmy describes an offline-first queue that holds transactions until connectivity returns, a built-in thermal printer, an SMS after every collection naming the amount, date and agent, and an interface in six Indian languages.
We do not know the split. There is no national survey of how many rounds run on paper, on a handheld or on a phone. Every percentage in circulation comes from a vendor's own marketing. Treat any such figure as unverified, however confidently it is quoted.
Step 5: End-of-day remittance
The agent returns to the branch with the day's cash and the day's records. The bank must set cash limits for collection and delivery covering its employees, agents and customers, and cash collected "should be credited to the customer's account on the same day or next working day, depending on the time of collection".
That last clause is the whole reason the technology tier matters. Same-day credit is a promise about posting, not about knowing. On a paper round nobody at the branch knows what was collected until the agent walks in.
Step 6: Reconciliation
The branch has to make two totals agree: the cash the agent handed over, and the sum of the member-wise entries recorded. Then each entry has to reach the right account.
On a manual round this is where the day goes wrong. The branch "loses visibility until the agent returns", with "no real-time record of what has been collected, from whom, and in what amount", and reconciliation means that "discrepancies, missed entries, illegible amounts, transactions recorded in the wrong member account, have to be identified and resolved manually". The branch is "always working from yesterday's data at best", and paper receipts "cannot be searched, audited, or reported on without manual effort".
The digital tiers attack this from the record end. ezPigmy describes a branch manager closing the collection session, which locks the agent's device against further entries, after which the portal produces reconciled export files for the core banking system plus day-wise and account-holder-wise reports. Note what that does and does not fix. It removes illegibility and arithmetic error and timestamps everything. It does not remove the cash, and it does not prove the cash in the bag matches the entries in the app.
Step 7: Commission
Commission is a percentage of deposits mobilised, typically 2.5% to 3%. It is paid on collections, not on balances, and not on lending work.
| Rule | Rate | Effective | Applies to |
|---|---|---|---|
| Maharashtra Cooperation Department order | 2.5% cap on deposits mobilised through pigmy agents | 1 April 2026 | ~16,000 credit co-operatives in Maharashtra |
| Maharashtra Cooperation Commissioner, revised | Raised to 3%; societies may set any rate at or below it | Reported 22 June 2026 | Same |
The revision followed a 12 June meeting with 42 credit society federations, which argued the 2.5% cap had hurt the earnings of grassroots savings mobilisers. The bar on commission for loan disbursement or recovery stayed. Maharashtra reports over 2,00,000 collection agents reaching close to 1 crore families.
Who bears the commission is disputed. For banks the answer is clear: the bank pays the agent and the depositor's balance is not reduced. But MAFCOCS chairman Kakasaheb Koyte is on record arguing that in Maharashtra's credit co-operatives "the commission paid to collection agents is typically borne by customers rather than the cooperative institutions". The mechanism, whether a deduction from each deposit, a lower rate or a closure charge, is undocumented. Do not assume either way without reading your own passbook.
Step 8: Maturity, or getting out early
| Institution | Premature closure treatment (checked 2026-09-09) |
|---|---|
| Canara Bank, Nitya Nidhi | Graded rates against 2.00% at full term: 0.10% under 12 months, 0.25% at 12-24, 0.50% at 24-39, 1.00% at 39-63; plus a 0.05% penalty on interest if closed within 12 months |
| Latur Urban Co-op Bank | 5% deducted from the deposit amount if withdrawn before 6 months; nil after |
| Chikkamagaluru DCC Bank | No interest paid on closure within 12 months |
Note the shape of these. Latur Urban's charge comes out of the principal, not the interest, which is materially worse than losing a 1% or 2% return. Read the closure clause before the rate.
Where the process actually breaks
Three failures recur, and only one is about technology.
The blind window. On a paper round the branch cannot see the day until it ends. Nothing can be verified, flagged or stopped while it is happening.
The illegible or misposted entry. A number written in the field and re-keyed at the branch passes through two hands. Wrong-account postings are ordinary, not exotic.
The cash itself. Every tier ends with one person carrying other people's money on foot. Digitising the record does not digitise the money, which is why RBI requires cash limits alongside the receipt rule.
What we could not establish
We found no reliable figure for how many pigmy rounds in India run on paper, on handheld machines or on smartphone apps. No survey exists, and vendor claims are not evidence.
We could not read the full Karnataka High Court judgment on the employee status of pigmy agents, which sits behind a paywall; we report only the holding as summarised.
We found no published commission schedule outside Maharashtra's state order. Rates elsewhere appear to be set institution by institution and are not disclosed on product pages.
And the mechanism by which some Maharashtra credit societies pass agent commission to depositors is asserted by a sector federation but appears in no institution's published terms we could locate.