Last Wednesday, the Employee Provident Fund Organization (EPFO) tied up with four private sector banks and one public sector bank to collect provident fund dues and make PF payments at zero cost.
The provident fund organization has tied up with the following banks – ICICI Bank, HDFC Bank, Kotak Mahindra Bank, Axis Bank and Bank of Baroda. The tie up with the above-mentioned banks will help EPFO to save around Rs. 125 crore annually. Also, the provident fund organization expects that this new move will accelerate its investment and help pay benefits to its members smoothly.
Now, companies who have bank accounts with the above-mentioned five banks would be able to deposit employee’s PF dues in the EPFO’s account directly by using internet banking.
The new initiative by EPFO seems to be cost effective, and it will reduce the cost of employers tremendously. According to Dr. V P Joy, the Central Provident Fund Commissioner, “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.”
Once the agreement between the banks and EPFO is in effect, the total annual cost of EPFO on making payments to it different members will come down to Rs. 50 crore, compared to Rs. 350 crore previously. Otherwise, each transaction made by EPFO through the aggregator mode to collect dues and make payments costs nearly Rs 12 per transactions.
The EPFO also aims to tie up with seven more banks including Central Bank of India, IDBI Bank, Corporation Bank, Indian Overseas Bank, Bank of India, Bank of Maharashtra, and Canara Bank to carry out the same activity.
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