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.
At a glance
- Where the scheme began
- Udupi, 8 October 1928, Syndicate Bank
- Institution types
- Urban co-operative banks, DCCBs, Souharda co-operatives, a regional rural bank
- Agent commission cap
- No state cap found
- Notable ruling
- Karnataka High Court, April 2026, on the employment status of pigmy agents
- State law for Souharda bodies
- Karnataka Souharda Sahakari Act 1997
Karnataka is the origin of the product. Syndicate Bank launched the Pigmy Deposit Scheme in Udupi on 8 October 1928, and the coastal belt around Udupi and Mangaluru remains the region most associated with it. The full story is in the history of the pigmy deposit scheme.
What operates here
The state has an unusually varied set of institutions running daily collection: urban co-operative banks, district central co-operative banks, Souharda co-operatives registered under the Karnataka Souharda Sahakari Act 1997, and at least one regional rural bank with a daily-deposit product.
That variety matters to a depositor, because deposit insurance follows the institution's legal character rather than the look of the product. A pigmy account at a co-operative bank carries DICGC cover; the same-looking product at a society does not.
The ruling that unsettled agent status
In April 2026 the Karnataka High Court held that the pigmy agents of a regional rural bank were employees of the bank rather than independent business facilitators, so GST was not leviable on their commission. The Court described a master-servant relationship resting on control, supervision and economic dependence.
It binds only in Karnataka, and it turned on the facts of one institution. But if agents are employees for tax, the same reasoning raises provident fund and gratuity questions that nobody has publicly worked through. We set out what is and is not settled in pigmy agent commission.
What we could not establish
We found no Karnataka order capping agent commission, of the kind Maharashtra has issued. Absence of a published order is not proof that none exists.