The pension fund regulator stated that this decision was taken after it was seen that the subscriber’s withdrawal amount could not be credited into their savings bank account due to various valid reasons such as invalid account number/account type, invalid/wrong IFSC, name mismatch, account dormant/frozen, account closed/inactive, etc.
“Due to unsuccessful transactions for the reasons as mentioned above, the amounts meant for the Subscribers could not be credited into the savings bank account remain with Trustee Bank till the correct account number is obtained from the Subscriber. This can be overcome with suitable technology intervention viz Instant Bank Account Verification” the PFRDA circular stated.
The instant bank account verification can be done at the time of processing of the withdrawal of funds request due to superannuation, premature or death of the subscriber/partial withdrawal request (as specified under the scheme).
PFRDA has also allowed Central Record-keeping Agencies (CRA) to use the penny drop process for registration of entities, wherever possible.
How will the penny drop method work?
Under the penny drop method, according to the PFRDA circular, CRAs can check the active status of savings bank account of subscribers and match the name in the bank account number with the name in the Permanent Retirement Account Number (PRAN) or as per the documents submitted.
The validity of account will be verified by making a ‘test transaction’ by penny dropping a specified amount into the beneficiary’s bank account and matching the name based on the penny drop response.
The response of ‘Success’ or ‘Failure’ would be provided by the service provider based on validation of the savings bank account number and name check as per CRA records. If the bank account details and other details are not correct, the alternate account number or additional supporting documents are to be submitted for updating the records.
In case the penny drop fails at the time of processing, subscribers will be informed to correct the bank account number and resubmit the application so that their withdrawal request can be processed in a time-bound manner.
“CRAs may suitably alert the Subscriber that he/she should not modify/close the existing bank account once the exit /withdrawal request is captured and till the time it is authorized by the nodal office/POP and amount credited to the account,” stated the PFRDA circular.
Charges for penny drop method
As per the circular, a small amount will be recovered from NPS subscribers by the CRAs for the purpose of instant bank account verification. The charge structure is as follows:
(i) K Fin Technologies Pvt Ltd (KCRA)- Rs. 1.90+ tax
(ii) NSDL e-Governance infrastructure Pvt Ltd (NCRA) – Rs. 2.40 + tax
The above charges include Re 1 credited in the savings bank account of the beneficiary as part of penny drop process, as per the circular.
