The Employees’ Provident Fund Organisation (EPFO) may introduce a “self-approval” mechanism for subscribers to withdraw provident fund (PF) monies from their accumulated corpus under an automated process by early next fiscal year, according to official sources.
If this results in any liquidity crunch for the EPFO, it may avail cash-credit from commercial banks to meet temporary requirements, said the sources. By FY24-end, the total corpus of EPF was Rs 24.75 lakh crore, of which about 63% was invested into financial instruments, such as government securities, corporate bonds, exchange traded funds, etc.
The EPFO is going to hold consultations with the Reserve Bank of India (RBI) and major commercial banks to prepare a road map on how this mechanism can be established, the sources said.
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The social-security agency is currently working on upgrading its technology infrastructure, which may be ready by March, to facilitate the easier withdrawal process. Going forward, the EPF subscribers will only be intimating the fund regarding their withdrawal amount, as against going through a tiresome withdrawal process, which is the norm at present, said the sources.
“We want to ease the process of withdrawal of claims via PF accounts as much as possible. The idea of allowing subscribers to withdraw money through ATMs is also part of the same process,” labour minister Mansukh Mandaviya told FE. He, however, refused to elaborate.
The sources clarified that the sectoral-limits and reasons of withdrawal will “not change”, only the process will. For instance, as per the extant norms, subscribers may withdraw up to 50% from the PF funds for the purpose of education and marriage. And for the repayment of home loans, the limit is 90%.
“The sectoral limits will not change, but the subscribers will find it easy…the withdrawal will be on their fingertips,” an official said.
“The current checks and balances (done through EPF officers) that are needed are likely to be reduced, filling of forms will not be required, as the entire process is going to be automated,” the person added.
The government is also exploring whether a digital wallet should be introduced, linked to EPFO, which may keep the processed claim amount,
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