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 agent is not on a salary. They are paid a commission on the cash they bring in, and across most of the sector that commission runs between 2.5% and 3% of collections. Everything else about agent pay follows from that one design choice: the income is variable, it rewards volume rather than hours, and it is fixed by whoever regulates the institution — which, for a pigmy deposit, is not the Reserve Bank of India.
What follows is the rate, who sets it, what it pays in a month, the unresolved question of who bears it, and a tax fight that is being settled in court rather than in a rulebook.
The rates that are actually published
There is no single national figure. What follows is every rate we could read on a primary or named source, on 9 September 2026.
| Who, and where | Rate | What it is |
|---|---|---|
| Maharashtra credit co-operatives, from 1 April 2026 | 2.5% maximum | Cooperation Department cap on commission on deposits mobilised through pigmy agents |
| Maharashtra credit co-operatives, from June 2026 | 3% maximum | Cap raised by the Cooperation Commissioner; societies may still fix a lower rate |
| Maharashtra, before the cap | 3% to 4% | What agents said they had been receiving |
| Aditya Anagha Multi-State Co-operative Credit Society | "4.5% + 0.5%", terms applying | The society's own recruitment page, describing it as among the highest in the industry |
| Co-operative banks regulated by RBI | No national rate | Set by each bank's own Board-approved policy |
The last two rows matter more than the headline range. A multi-state society advertising 4.5% plus 0.5% to recruit agents sits outside any state cap, which shows that "2.5% to 3%" is a Maharashtra rule and a rough norm, not a law of the product.
Why Maharashtra capped it, and then unwound the cap
Maharashtra's Cooperation Department capped pigmy commission at 2.5% for its urban and rural non-agricultural credit co-operatives with effect from 1 April 2026. Before that, societies set their own rates. The order reaches roughly two lakh agents serving about one crore families across some 16,000 credit co-operatives.
The objections were immediate. Agents said the cut landed amid rising costs, and that dropping from the 3% to 4% they had been earning would take their income with it. Kakasaheb Koyte, chairman of the state federation of credit co-operatives (MAFCOCS), called the move potentially unjust to agents who work door to door.
After representations from societies, federation leaders and agents, and a departmental meeting on 12 June 2026 involving representatives of 42 federations, the Cooperation Commissioner raised the ceiling to 3%. It remains a ceiling: a society may pay less depending on its financial position. The revised circular also keeps the bar on paying this commission for loan disbursement, recovery or other business — it is a deposit-collection payment only.
RBI sets no rate. It requires a policy
For a co-operative bank, this is a governance rule rather than a price rule.
RBI's Branch Authorisation Directions of 4 December 2025 require a bank's Board to put in place a separate policy for "Offering Doorstep Banking services including selection of agents and payment of fee / commission, charges, if any, to be levied on the customer". The doorstep banking annex repeats it: where a bank engages agents, "the policy approved by the Board lays down the broad principles for selection of agents and payment of fee / commission etc."
That is the whole of it: no percentage, no floor, no ceiling. The same Directions also restrict which banks may use agents at all, which we cover in the rules behind pigmy collection.
What it pays in a month
Any figure here is arithmetic, not a survey: accounts on the route × average daily collection per account × 25 working days × the commission rate.
| Route | Monthly collection | At 2.5% | At 3% |
|---|---|---|---|
| 100 accounts at ₹50/day | ₹1,25,000 | ₹3,125 | ₹3,750 |
| 150 accounts at ₹100/day | ₹3,75,000 | ₹9,375 | ₹11,250 |
| 250 accounts at ₹100/day | ₹6,25,000 | ₹15,625 | ₹18,750 |
| 300 accounts at ₹150/day | ₹11,25,000 | ₹28,125 | ₹33,750 |
The one reported figure we found runs alongside this. Indian Cooperative, covering agents' objections to the cap, wrote that agents "were earlier receiving commission between 3 and 4 per cent", enabling them to earn "nearly Rs 10,000 to Rs 25,000 per month depending on their collections". Working backwards, ₹10,000 to ₹25,000 at 3% to 4% implies monthly collections of roughly ₹2.5 lakh to ₹8.3 lakh — the middle rows above.
Three things compress the number. It is gross, before travel, phone and the time cost of a daily route. Commission follows collections, so a member who skips a week pays the agent nothing. And institutions cap the commissionable amount: Canara Bank's deposit policy limits Nitya Nidhi collection to ₹1,000 per day per account and ₹30,000 a month, and states that "No interest and commission shall be paid beyond this limit."
Who actually bears the cost: the disputed part
This is the question every depositor asks, and it does not have one answer.
At a bank, the bank pays it, as its own cost. RBI's deposit-interest Directions for rural co-operative banks prohibit paying "any remuneration or fees or commission or brokerage or incentives on deposits in any form or manner", with a short list of exceptions of which the first is "commission paid to agents employed to collect door-to-door deposits under a special scheme". Canara Bank's Policy Guidelines on Deposits 2026-27 carries the identical prohibition and exception. The commission comes out of the bank's own margin — which is precisely why the rate on a daily-collection product is lower than on an ordinary deposit.
RBI does separately allow a bank to charge the customer for doorstep services, but only if the charge sits in the Board-approved policy, forms part of the agreement, and is prominently shown on the website and brochures. That is a published, contractual charge. It is not the agent's commission, and an agent taking a cut from your hand is not it.
At a credit society, it may be different, and the mechanism is undocumented. The MAFCOCS chairman is on record that "the commission paid to collection agents is typically borne by customers rather than the cooperative institutions." We could find no circular, scheme document, passbook entry or model bye-law, in Maharashtra or elsewhere, setting out how that pass-through works — a lower credited amount, a separate charge, or a rate differential. So we will not resolve it for you. If you deposit with a society, ask in writing whether any part of the agent's commission is charged to your account.
The tax and employment-status question
Only forum threads have been answering this, and it moved in 2026.
The tax department's position, and the prevailing practitioner view, has been that pigmy commission is a taxable agency service: the agent is a business facilitator, and the institution owes GST under reverse charge. Practitioner discussion still runs that way, reasoning that an agent with no payroll status, no provident fund and no gratuity, paid purely on collections, is a contractor.
The Karnataka High Court disagreed. In M/s Karnataka Vikas Grameena Bank v. Deputy Commissioner of Commercial Taxes (Enforcement-2), W.P. No. 100806 of 2024, decided by Justice M. Nagaprasanna at the Dharwad Bench on 8 April 2026, the Court quashed show-cause notices and DRC-01A intimations demanding GST under reverse charge on commission paid to the bank's pigmy agents. It held that the agents are employees, not business facilitators, so their services fall within Sl. No. 1 of Schedule III of the CGST Act — outside the scope of supply altogether.
The reasoning is substance over label. The Court found the relationship "not one of detached contractual engagement, but one imbued with the attributes of a master-servant nexus", resting on "control, supervision and economic dependence", and treated the commission as in substance akin to wages. Reports of the order note that the agents maintained security deposits with the bank, were assured minimum remuneration and were entitled to gratuity, and that the business-facilitator characterisation did not match RBI's own facilitator and correspondent models. This was a final order, not an interim stay.
What that does not settle:
- It is a High Court, not a tribunal, and not the Supreme Court. It binds within Karnataka; elsewhere it is persuasive.
- The petitioner was a Regional Rural Bank, not a co-operative bank, a patpedhi or a credit society. The finding turned on facts — control, gratuity, assured minimum, security deposit — that differ institution by institution. A society whose agents have none of those is not obviously covered.
- It cuts both ways. If an agent is an employee for GST, the same reasoning carries consequences for provident fund, gratuity and labour protection that no institution we could find has publicly worked through.
What we could not establish
- Whether the Karnataka judgment has been appealed. We found no report either way, and could not open the order itself: indiankanoon.org returned HTTP 403 on 9 September 2026, so we relied on four independent reports. Those reports differ on the date, three giving 8 April 2026 and one 15 April 2026.
- What the percentage is applied to. Every source says "commission on deposits mobilised" or similar without defining the base — gross collections, net of withdrawals, or new deposits only. The difference is large and undocumented.
- Whether, and how, credit-society members bear the commission. The federation's chairman says customers typically do. No document we found describes the mechanism.
- Commission rules outside Maharashtra. We found published caps for that state only, and no comparable orders from other Registrars. Their absence from our search is not evidence that no rule exists.
- What agents earn nationally. The ₹10,000 to ₹25,000 figure is one news report, about one state, at a rate since capped. We found no survey of agent incomes; the table above is arithmetic, not evidence.