The Employees’ Provident Fund Organisation (EPFO) is considering involving more banks to collect EPFO proceeds from organisations and submit them to the retirement fund body, as per the Economic Times report. The proposal to expand the collecting bank is to speed up collection, streamline the process, and add to the employers’ and employees’ convenience and overall experience. EPFO has been facing numerous issues for quite some time due to its slow operational processes, outdated IT infrastructure, several customer complaints, claim rejections, and so on. Lately, changes have been made in the auto settlement rules for a limited amount of money, sending messages to subscribers on every transaction, besides overhauling the organisation’s overall IT infrastructure.
EPFO Plans To Allow More Banks For EPF Collection To Speed Up The Process: Know The Impact
The Employees’ Provident Fund Organisation (EPFO) plans to allow more banks to collect EPF funds to facilitate the convenience of both employees and employers.
Reportedly, the changes under consideration include reducing the 0.50 per cent ceiling on online collection to 0.20 per cent and minimising aggregators’ role in the process. The State Bank of India (SBI) has been the sole collector and aggregator till 2017. EPFO tied up with five more banks, including Bank of Baroda, HDFC Bank, Axis Bank, ICICI Bank, and Kotak Mahindra Bank in that year and a few more banks later to expedite its investment and payment processes.
Impact On Employers And Subscribers:
Says Sandeep Agrawal, founder and director, Teamlease Regtech, a regulatory technology solutions company, “With limited banking options, the employers have to either open bank accounts supported by EPFO or transfer funds to their consultants to make their PF remittances. The move, if implemented, will directly benefit employers as they will have more banking options, which would ease transactional hassles, and make it easier to manage their provident fund remittances.”
He adds that the move by EPFO to nearly double the number of empanelled banks for the centralised collection of EPF contributions is still a proposal and is likely to be considered at the upcoming board meeting of the EPFO on November 30, 2024.
For subscribers, it will mean an indirect benefit. As EPF is deducted from salary and submitted to the retirement body by the employer, a streamlined process for them would also mean a smooth process for subscribers and fewer complaints. Agrawal opines, “The move might indirectly benefit subscribers considering the employers will be able to remit the contributions in time”.
Current Process:
At present, the banks collecting 0.50 per cent of the EPFO collection are authorised banks, and collecting less than this needs to be routed to EPFO through an aggregator. While this gives employers and employees the option to have an account with any bank they prefer, direct collection online through an authorised bank means a faster fund transfer to EPFO and vice versa. At the same time, collection through aggregators’ takes more time, around two more days to get transferred.
By allowing more banks, there will be more direct transfers and speedy fund collections and payment processes.