EPF inactive accounts: EPFO issues new rules for subscribers with inoperative accounts

The Employees Provident Fund Organisation (EPFO) has floated new rules for subscribers with inactive and transaction-less accounts in a bid to curb fraud and unauthorised withdrawals. The revised standard operating procedure (SOP) has been enhanced to incorporate a stricter verification process for accounts that have been inactive for an extended period of time.

In a circular issued on August 2, 2024, the EPFO said: “In order to handle transaction-less and inoperative accounts, the field offices should do a stronger due diligence so that, cases of impersonation/identity theft or otherwise do not occur.”

As per the new rules, EPFO has marked accounts as transaction-less accounts where there have been no transactions (no debit or credit of contribution other than crediting of periodic interest) for at least three years. The transaction-less accounts can be considered inactive accounts due to no transactions taking place for three years.

Besides, accounts meeting the existing criteria under Para 72(6) of the EPF Scheme will continue to be designated as ‘inoperative accounts'. Both categories will face enhanced verification before withdrawals or transfers are allowed.

However, as per amended definition, an account shall be classified as inoperative after the member attains the age of 58 years. Hence, interest shall be credited to the account of a member up to the age of 58 years.

EPFO has explained different situations for transaction-less accounts, like the presence of a Universal Account Number (UAN) may arise in an account with no transactions. Instances may occur where existing UANs are present but are not linked with Aadhaar or KYC compliant.

Members with transaction-less or inoperative accounts lacking Universal Account Numbers (UANs) will be required to personally visit EPFO offices or attend special camps designated for the purpose of biometric verification and photo capture. This mandatory process is put in place to authenticate the identity of claimants and mitigate risks associated with impersonation.

For accounts already linked to Universal Account Numbers (UANs) but lacking proper Know Your Customer (KYC) details, members are required to complete KYC seeding. This can be done either through their employers or directly with EPFO (Employees' Provident Fund Organisation) offices. The authorities responsible for approving UAN generation and KYC updates will vary based on the account balance. Higher-value accounts will necessitate clearance from senior officers.

“The transaction-less accounts would require an additional layer for higher due diligence. Further, the existing claim settlement and verification procedures for these accounts necessitate revision to institutionalize greater scrutiny in the processing and settlement of such accounts. This entails a comprehensive reassessment of the existing practices to incorporate updated protocols, embracing digital technologies for enhanced efficiency within the evolving landscape of the EPFO,” the circular said.

Unblocking frozen accounts

The EPFO has introduced a comprehensive verification process to address the issue of frozen accounts. This new procedure involves thorough checks of both digital and physical records, verification from employers, and the utilization of a 'crowdsourcing' method. As part of this initiative, the EPFO will reach out to 20 active Universal Account Number (UAN) holders who were employed at the same organization during the same timeframe as the claimant for verification. At least five confirmations from these members will be necessary to serve as an additional identity validation.

Additionally, the Standard Operating Procedure (SOP) sets up a structured approval mechanism for handling unblocking requests and subsequent claim settlements. Requests stemming from previously inactive accounts will now face heightened scrutiny, with approval stages tied to the claim amount. For example, claims exceeding Rs 25 lakhs will mandate approval all the way up to the Officer-in-Charge level.

Per the EPFO circular, the process of unblocking EPF accounts can span between 20 and 25 days from the submission date, contingent upon the account type and the verification criteria involved.