To ensure a better mechanism for dues collection, Employees Provident Fund Office (EPFO) has partnered with five banks.
The venture with Bank of Baroda, ICICI Bank, HDFC Bank, Axis Bank and Kotak Mahindra Bank will enable EPFO to save around Rs 125 crore a year and expedite its investments as well as payment of benefits to its members.
Employers having their bank account with these five banks can now deposit Provident Fund (PF) dues directly in EPFO’s account using internet banking in real time basis instead of going through the aggregator mode.
Prior to this arrangement, the EPFO had to collect dues and make payments through aggregator mode, each transaction costing the agency 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,” said V P Joy, Central Provident Provident Fund Commissioner.
“After inking agreements with five more banks today, these charges would be reduced to around Rs 50 crore a year,” he said.
EPFO is already in negotiations with seven more banks for a similar 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.