In a big relief for lakhs of EPFO subscribers, the Ministry of Labour and Employment is planning to initiate a clean-up drive to settle over 7.11 lakh inoperative EPF accounts and automatically refund balances of up to Rs 1,000 to members, according to a PTI report.
Around Rs 30.52 crore, which has been lying unclaimed in these small, inactive accounts, will soon be credited directly to subscribers’ Aadhaar-linked bank accounts — without any paperwork, claim form or visit to an EPFO office, the report said.
The move is being seen as part of the government’s broader push to modernise and streamline services under the Employees’ Provident Fund Organisation (EPFO), making the system more member-friendly and technology-driven.
What is the latest decision?
According to the report citing official sources, the Labour Ministry has decided to settle 7.11 lakh inoperative EPF accounts, each with a balance of Rs 1,000 or less.
The key features of the mega EPFO cleanup drive is that subscribers of these inoperative accounts will not have to file any application or make any physical verification. They will not have to visit the EPFO office either. The amount will be automatically credited to the Aadhaar-linked bank account.
“A total of Rs 30.52 crore stuck in over seven lakh inoperative accounts of the retirement fund body EPFO will soon be returned to the account holders or their legal heirs,” a Labour Ministry source was quoted as saying in the report.
In cases where the subscriber has passed away, the money will be released to the nominee or legal heir, ensuring rightful beneficiaries receive the funds.
What is an inoperative EPF account?
An EPF account is classified as inoperative if no contribution has been received for more than 36 months from the employer on behalf of the employee. Many such accounts belong to people who changed jobs, retired, or were unaware of small leftover balances.
Over Rs 10,900 crore lying idle in inoperative accounts
The larger concern, however, goes beyond just small accounts. As per sources cited in the report, around Rs 10,903 crore is currently lying in 31.86 lakh inoperative EPF accounts.
Of these, nearly seven lakh accounts have balances of Rs 1,000 or less, amounting to Rs 30.52 crore. The current drive focuses on these smaller accounts first, but officials have indicated that a phased review of all inoperative accounts will follow.
This suggests that more such refunds may happen in the coming months.
Part of a larger reform push
The latest move is not an isolated step. Over the past year, the government has taken several measures to improve EPFO services and reduce delays. These include increasing automation in claim processing, risk-based verification to reduce manual intervention, regular review meetings to monitor grievance redressal and efforts to simplify KYC and Aadhaar linking.
The focus has clearly shifted towards making EPFO processes faster, transparent and less paperwork-heavy.
EPFO 3.0: What changes from next financial year?
The clean-up drive comes at a time when the ministry is preparing to roll out EPFO 3.0, a major digital transformation project expected to kick in from the next financial year.
The key idea behind EPFO 3.0 is to modernise services through a Core Banking System (CBS)-enabled framework, allowing seamless access to member accounts and faster service delivery.
What EPFO 3.0 aims to achieve – streamlined processes, reduced paperwork, unified digital platform for all member services, faster claim settlement and improved grievance monitoring.
One of the most significant changes under the new system is the proposed automatic processing of claims that pass risk management checks.
Currently, claim settlement can take up to 20 days in some cases. Under the new system, this is expected to come down to less than three days for eligible claims.
If implemented smoothly, this could significantly reduce member complaints and long waiting periods — a long-standing pain point for subscribers.
Why this matters for EPF subscribers
For many employees, EPF is their largest long-term savings pool. Even small leftover amounts often remain unclaimed due to lack of awareness or procedural hassles.
By automatically crediting small inoperative balances, the government is sending a clear message — the focus is shifting towards proactive settlement, digital-first service and member convenience.
The clean-up of seven lakh accounts may look small in value terms, but it signals a broader attempt to fix systemic inefficiencies.
With EPFO 3.0 on the horizon and increasing automation in place, the coming year could mark a turning point in how India’s retirement fund system functions.