National Pension System Exit and Withdrawal Rules: The Pension Fund Regulatory and Development Authority (PFRDA) has introduced immediate bank account verification by way of the penny drop approach to make sure timely credit of the quantity to the bank account of eligible beneficiary on exit/withdrawal from the NPS account.
According to the regulator, the instance bank account verification by way of penny drop will defend the interest of subscribers with timely credit of quantity. It will also resolve the situation of return of remittances and provide more due diligence to recognize the rightful beneficiary.
PFRDA noted quite a few situations in which the subscribers’ withdrawal quantity could not be credited into his Savings Bank Account (SBA) due to quite a few factors like invalid account quantity/account variety, invalid/incorrect IFSC code, name mismatch, account dormant/frozen, account closed, and so forth.
Because of unsuccessful transactions, the amounts meant for the subscribers stay with Trustee Bank till the right account quantity is obtained from them To overcome this difficulty, PFRDA has asked CRAs to adopt immediate bank account verification.
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“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,” the regulator mentioned in a circular dated 20th July 2021.
PFRDA additional mentioned that by way of the ‘penny drop’ approach, CRAs would verify the active status of SBA and match the name in bank account quantity with the name in PRAN (Permanent Retirement Account Number) or as per the documents submitted.
How will immediate bank account verification work?
“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,” the circular mentioned.
According to the regulator, the penny drop can take place when processing the exit/withdrawal request by a subscriber.
The response of ‘Success’ or ‘Failure’ would be offered by the service provider based on validation of the SBA quantity name verify 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 the ‘penny drop’ process for registration of entities wherever possible,” PFRDA mentioned.
The regulator also mentioned that CRAs must alert the subscriber not to modify/close the current bank account after the exit/withdrawal request is captured and till the time it is authorized by the nodal workplace/POP and quantity credited to the account.