Provident-fund accounts, which hold savings critical to financial security of employees, are being linked to bank accounts so that they can be directly accessed with debit cards at ATMs, Union labour minister Mansukh Mandaviya said on Tuesday.
The government also announced that it was raising the limit ₹1 lakh that applies to automatic settlement of advances -- or partial withdrawals -- to ₹5 lakh.
“With the elevated limit of ₹5 lakhs, additional advance claims will now qualify for auto-settlement, leading to their processing within three days of submission. This enhanced limit and faster access to funds will help members get timely financial support when they need it the most,” the government said in a statement on Tuesday.
The change in the limit, effective Tuesday, was first announced by Mandaviya on September 17 during an event to mark the 100 days of the Modi government’s third tenure.
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The minister said once rolled out, the feature will allow users the option to select an employee’s provident fund (PF) account when interacting at an ATM, apart from regular savings deposits. The user can then transact and take out eligible sums without applying to the Employees’ Provident Fund Organisation (EPFO), the state-run retirement funds manager.
{{/usCountry}}The minister said once rolled out, the feature will allow users the option to select an employee’s provident fund (PF) account when interacting at an ATM, apart from regular savings deposits. The user can then transact and take out eligible sums without applying to the Employees’ Provident Fund Organisation (EPFO), the state-run retirement funds manager.
{{/usCountry}}“The PF account will be integrated into ATMs, and an employee will be able to directly withdraw funds as per eligibility,” Mandaviya said.
The minister said work was on to make this facility available across banks, but didn’t give a date by when this feature will be rolled out.
News agency PTI quoted an unnamed senior official as stating that a certain proportion of a PF fund will be frozen and made available to the account holder’s bank account, which can then be withdrawn using methods such as UPI or ATM debit cards.
Some back-end software integrations are still being worked out, the news agency reported, with the official explaining that EPFO, which does not have a banking licence, cannot allow members to withdraw money directly from their funds.
An official said since bank accounts, Aadhaar and PF accounts are already linked, the idea is offer “PF functionality” in debit cards and ATMs. The EPFO has made it mandatory for subscribers to link the biometric identification Aadhaar with PF accounts, based on which a universal account number are allotted to each employee.
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Provident funds provide retirement income and a financial safety net for nearly 70-million salaried Indians. It is often the key corpus of lifetime savings of working people.
Under the PF Act, all firms with 20 or more employees must register with the EPFO. An employer and worker are both required by law to contribute 12% of a person’s basic salary towards a corpus managed by the EPFO.
A worker can partially withdraw PF funds during certain financial emergencies such as medical treatment, purchase of a house or marriage in the family.
“Once the ATM feature becomes operational, subscribers won’t need to fill up different forms and apply for advances. The ATM will automatically allow direct withdrawal as per eligibility,” Mandaviya said.
The move is part of an overhaul of the retirement funds body, which has been hobbled by complicated procedures and delays in processing employees’ claims.
Among key steps taken recently, employees are no longer required to submit clearances from and attestation by their HR department for withdrawals and settlement of claims. Both these processes have been moved completely online.
The EPFO’s website, the gateway for key services, and its back-end are in the process of being redesigned and the makeover will take a couple of more months, according to the minister.
The minister, who was in Geneva for a global labour meeting recently, said the International Labour Organisation had acknowledged an expansion in India’s social protection coverage from 19% in 2015 to 64.3% in the current year and these updated figures are now part of the ILOSTAT database. HT had reported this on June 12.