NEW DELHI: The plan for allowing withdrawal of employee provident fund (EPF) claims through ATM has a long way to go.
Labour ministry sources have said that this is just an idea floated by the labour minister, and it needs a lot of deliberations between the labour ministry, EPFO and the banking regulator before it could be implemented.
The idea is to have a hassle-free claim settlement process as high rejection rates are becoming a headache for individuals, who keep their life savings with EPFO (Employee Provident Fund Organisations) for use after retirements or during emergency fund requirements.
However, the idea of allowing EPFO members to withdraw from ATM is not happening in the immediate future. The ministry has a vision to ease the claims process, and the idea is at a very early stage, says a labour ministry source. “Without the approval of the RBI, the banking regulator, the idea cannot be implemented. Besides, there are other several issues like frequency and limit of withdrawal that the EPFO needs to figure out before going ahead with the project,” the labour ministry source told TNIE.
The ministry is also exploring the possibility of introducing a digital wallet, where the claimed amount could be kept and withdrawn from. “These ideas, including issuing ATM cards, cannot be implemented without a strong backing from the banking regulator and banks,” the ministry source said, adding that anything like this is not possible in the immediate future.
Improving digital infra
The EPFO has been trying to improve its digital infrastructure and ease the claims process. Early this year, the EPFO implemented the first of the six modules of Central IT System (CITS) 2.01. This facility will reduce the time and effort while providing facilities such as online submission of application, validation of applications and transfer of past accumulations of the member.
CITS 2.01 will replace the earlier system of physical submission with voluminous documents and allow the establishment to track its application with a tracking ID. More modules of CITS 2.01 are likely to be implemented from 1 January 2025.
The EPFO has reduced the rejection of claims to 25% till November 2024. In 2022-23, the combined rejection and return ratio was 34%, while in the year before, the claim rejections had touched 35%. Claims are rejected when the claimant is not eligible for the type of advance or withdrawal. Claims are returned if there is any deficiency. Returned claims can be resubmitted after corrections.
The labour ministry has claimed that the implementation of CITS 2.01 has increased the number of claims settled in the current financial year. During 2023-24, EPFO settled 4.45 crore claims for an amount of R1.82 lakh crore. In the current financial year, 3.83 crore claims have already been settled for more than R1.57 lakh crore, the CBT was informed.
In FY25, 1.15 crore claims have been settled in auto mode, whereby requests for withdrawals for education, marriage and medical purposes are settled automatically. The limit for auto claims settlement facility has also been extended to R1 lakh from R50,000 which has also been extended to advances for housing, marriage and education.