EPF withdrawals via ATM is still in the making

December 19, 2024 Finance Talk Valli Sarvani

The ambitious plan to enable Employee Provident Fund (EPF) withdrawals through ATMs is still in its infancy and may take considerable time before becoming a reality.

Labour ministry sources confirm that while the idea has been floated, it requires extensive deliberations involving the ministry, the Employee Provident Fund Organisation (EPFO), and the Reserve Bank of India (RBI).

The proposal aims to create a seamless and hassle-free claims process, addressing high rejection rates that frustrate individuals relying on their life savings for retirement or emergencies.

However, the ministry has clarified that such measures are far from immediate implementation.

Approval from the banking regulator, along with decisions on withdrawal limits and frequency, are critical prerequisites.

In addition to ATM withdrawals, the ministry is also considering introducing a digital wallet to hold claimed funds for ease of access.

However, such ideas require strong backing from regulatory authorities and banking institutions.

While the ATM withdrawal plan remains a distant goal, the EPFO is already working to streamline its claims process through digital infrastructure upgrades.

Earlier this year, it launched the first module of the Central IT System 2.01.

This system eliminates the need for physical documents, allowing online submission, application tracking, and seamless transfer of past accumulations. More modules are expected to roll out by January 2025.

These advancements have significantly improved claims processing. Claim rejections, often due to ineligibility or deficiencies, were dropped to 25% in November 2024.

These were down from 35% two years ago. Additionally, automated claims settlement for education, marriage, and medical needs has expanded, with the limit increased to ₹1 lakh.

The EPFO has shown remarkable improvement in claim settlements.

In FY24, it processed 4.45 crore claims worth ₹1.82 lakh crore, and in FY25, 1.15 crore claims have already been settled automatically.

The road to ATM-based EPF withdrawals is still long, but ongoing digital initiatives reflect the ministry’s commitment to improving efficiency and accessibility for EPF members.

Image from Pxhere (Free for commercial use / CC0 Public Domain)

Image Published on January 30, 2017