The Pension Fund Regulatory and Development Authority (PFRDA) has launched an instant bank account verification service to guarantee that money from the National Pension System (NPS) is credited to subscribers' bank accounts in a timely manner when they exit or make a withdrawal from the system. According to a statement issued on July 20, 2021 PFRDA has said that "During the exit (Superannuation, premature or due to death) or in partial withdrawal from NPS, the Subscribers/nodal offices/POPs (Points of Presence) initiate the withdrawal request by mentioning the required details including the bank account number and IFSC code into which the withdrawal proceeds are to be credited. Once the withdrawal request is verified and authorized in the Central Record Keeping (CRA) system, the proceeds are credited to the subscriber's/claimant's bank account as the case may be, through electronic mode by the Trustee Bank."
The pension fund regulator also said that there are instances when the Subscriber's withdrawal amount could be credited into the Subscriber's Savings Bank Account (SBA) owing to reasonable reasons such as invalid account number/account type, invalid/wrong IFSC, name mismatch, account dormant/frozen, account closed/inactive, account does not exist, account is transferred, credit freeze, and account type mismatch etc.
For the benefits of subscribers the pension fund regulator has stated that "Due to unsuccessful transactions for the reasons as mentioned above, the amounts meant for the Subscribers could not be credited into the SBA 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."
Know about 'Penny Drop' Facility
According to the official announcement made by the pension fund regulator "In order to resolve the issue of return of remittances, to protect the interest of subscribers with timely credit of amount and for additional due diligence to identify the rightful beneficiary, Instant Bank Account Verification by 'penny drop' would be adopted by CRAs, by integrating their IT system and exit framework with the Fin-tech service providers."
Through the 'penny drop' process, CRAs would check the active status of SBA and match the name in bank account number with the name in PRAN (Permanent Retirement Account Number) or as per the documents submitted. The validity of account is verified by making a 'test transaction' by penny dropping a specified amount into the beneficiary's SBA and matching the name based on the penny drop response, PFRDA said.
The 'penny drop' can happen at the time of processing of the Exit/Withdrawal request. The response of 'Success' or 'Failure' would be provided by the service provider based on validation of the SBA number 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, the nodal officer /POP/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 also use 'penny drop' process for registration of entities wherever possible, according to PFRDA.
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, PFRDA has clarified in the statement.
Penny Drop Charges
The following is the current charge structure for Instant Bank Account Verification that will be recovered by CRAs from Subscribers for reimbursement to the service provider.
(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 SBA of the beneficiary as part of penny drop process.
The PFRDA has stated in the circular that "CRAs are advised to implement the process of 'Instant Bank Account Verification for the benefit of subscribers and as part of additional due diligence to verify the beneficiary."