NPS withdrawal: Penny drop facility to check bank account details of subscribers
The Pension Fund Regulatory and Development Authority (PFRDA) has introduced a system for instant bank account verification of subscribers of the National Pension System to ensure timely credit of amount in case of withdrawal proceeds.
The system, named ‘penny drop’, would be adopted by central recordkeeping agencies (CRAs). It will check if the bank details provided by the NPS subscriber is active and valid by crediting Re 1 into the account, the pension regulator said.
The facility was reportedly introduced after difficulties were faced while crediting the withdrawal amount to the account of the subscriber due to several reasons like invalid account number/account type, invalid/wrong IFSC, name mismatch, frozen/dormant account, closed/inactive account and so on.
In a circular, the PFRDA said, "Due to unsuccessful transactions for the reasons as mentioned above, the amounts meant for the Subscribers could not be credited into the savings bank account remain with Trustee Bank till the correct account number is obtained from the Subscriber. This can be overcome with suitable technology intervention viz Instant Bank Account Verification."
Under usual circumstances, an NPS subscriber places a withdrawal or partial withdrawal request by mentioning details, including the bank account number and IFSC code into which the withdrawal proceeds are to be credited. Once the withdrawal request is verified and authorised in the CRA system, the proceeds are credited through electronic mode.
Once the ‘penny drop’ facility is in place, CRAs will check the active status of the savings bank account and match the name in account with the one used in PRAN (Permanent Retirement Account Number) or as per the documents submitted.
The account will be verified by making the 'test transaction' through penny dropping a specified amount, Re 1, into the beneficiary’s account and matching the details based on the ‘penny drop’ response.
The ‘penny drop’ facility can be used at the time of processing of an exit/withdrawal request. The response of ‘success’ or ‘failure’ would be provided by the service provider based on validation of the savings account number name check as per CRA records.
If details do not match, an alternate account number or additional supporting documents would have to be submitted for updating the records and continue with the withdrawal proceedings.