Five banks to collect PF dues - The Employees Provident Funds and Miscellaneous Provisions Act, 1952
It is now high time that the administrative charges be either removed or reduced substantially in order to reduce the financial burden upon the employers – Editor.
Retirement fund manager Employees Provident Fund Organisation (EPFO) joined hands with a group of banks in a move to expand its service offerings and reduce transaction cost by at least Rs. 300 crore a year.
On the one hand, the move will help EPFO become more customer friendly by allowing employers and employees to remit and receive provident fund contributions/withdrawals and pension claims from a number of banks, on the other, it would help the organisation save Rs.300 crore a year in transaction expenses.
"This is a win-win for banks and for us in EPFO," labour minister Bandaru Dattatreya said. "The banks have agreed to offer zero cost transactions helping us save money," said the minister, who also heads the EPFO central board.
For 60 years, State Bank of India was EPFO's sole banking partner. In December 2016, EPFO roped in four more nationalized banks : Punjab National Bank, Allahabad Bank, Union Bank and Indian Bank. On Wednesday EPFO tied up with five more -ICICI, Kotak, HDFC Bank, Bank of Baroda and Axis Bank.
"Yearly, we spend around Rs.350 crore in terms of transaction charges. With 10 banks in our fold, it will reduce our cost by Rs.300 crore," central PF commissioner V.P. Joy said on the sidelines of the agreement signing event.
EPFO has now asked seven more banks-IDBI Bank, Canara Bank, Indian Overseas Bank, Bank of lndia, Bank of Maharashtra, Central Bank and Corporation Bank – to come on board. Once these banks join in, the EPFO will save another Rs.40 - Rs.45 crore a year, lowering its annual transaction cost to less than Rs.10 crore from nearly Rs.350 crore a year.
Dattatreya said the zero cost transaction service provided by banks may also reduce the administrative cost of EPFO, which would mean lower expenses for employers in dealing with the retirement fund manager. EPFO charges 0.65% from employers as administrative cost for managing employees' PF corpus.
The Tie-ups with bank of Baroda, ICICI Bank, HDFC Bank, Axis Bank and Kotak Mahindra Bank will help EPFO save around Rs.125 crore a year and expedite its investments as well as payment of benefits to its members.
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