Retirement fund body EPFO today inked pacts with five banks for collections of PF dues and to make payments of PF withdrawals, pension and insurance. 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. Now, employers having bank account with these banks can deposit PF dues directly in EPFO’s account using internet banking in real time basis instead of going through the aggregator mode.
In the absence of this arrangement, the EPFO has to collect dues and make payments through aggregator mode, each transaction costing around Rs 12. “The transaction charges for making payments to members in their accounts in different banks used to cost us Rs 350 crore a year. This was reduced to Rs 175 crore after PNB, Allahabad Bank, Indian Bank, Union Bank of India started online collection of dues in addition to SBI,” Central Provident Provident Fund Commissioner V P Joy told reporters here.
You may also like to watch:
After inking agreements with five more banks today, these charges would be reduced to around Rs 50 crore a year, he said. EPFO is negotiating with seven more banks for the same purpose. Tie-ups with these banks will be beneficial because each of them accounts for 0.5 per cent of EPFO remittances a year. The seven banks are IDBI Bank, Bank of India, Corporation Bank, Indian Overseas Bank, Canara Bank, Central Bank of India and Bank of Maharashtra.
“Negotiations with these banks are on. After tying up with them, the transaction charges would cost the EPFO few crore a year,” he said. On this occasion, Labour Minister Bandaru Dattatreya said the EPFO may think of reducing administrative charges further in view of reduction in the transaction charges. The SBI was the sole banker of the EPFO since 1952 when the body came into existence. Later, the EPFO allowed employers to deposit PF contributions to its SBI account through their bank account in over 50 banks.
The EPFO had reduced the administrative charges to 0.65 per cent of wages on which PF contributions are paid from earlier levels of 0.85 per cent and 1.10 per cent. The EPFO manages a corpus of around Rs 12 lakh crore and has 4.5 crore contributing members. It received around Rs 75,000 crore as remittances every year.