The Employees’ Provident Fund Organisation (EPFO) has inked an agreement with four private banks and Bank of Baroda for the purpose of collection of provident fund dues from the employers and payments to its subscribers.
This is the first time the EPFO has roped in private banks, namely, ICICI Bank, HDFC Bank, Axis Bank and Kotak Mahindra Bank. Earlier, the EPFO was making use of the services of only the state-run banks. This move of the EPFO will help the organisation to save nearly Rs 300 crore per year as the five banks have agreed to zero transaction charges.
Already the EPFO had tied up with five other banks. The five other banks are State Bank of India (SBI), Punjab National Bank, Allahabad Bank, Indian Bank and Union Bank of India. The latest agreement will now authorise 10 banks to collect provident fund contribution and make payment to the employees. Every year, the EPFO settles around 1.16 crore claims and collects ₹75,000 crores from establishments under the EPF Act.
Employee Provident Fund (EPF)
The Employee Provident Fund (EPF) is a retirement benefit applicable only to salaried employees. It is a fund to which both the employee and employer contribute fixed amount (percent) of the former’s basic salary amount each month. This percentage is pre-set by the government. At present, the entire EPF amount is tax-free at the time of withdrawal if the employee has completed five years of continuous service.
EPFO is a statutory body of Union Government that comes under the aegis of Ministry of Labour and Employment. It is one of the largest social security organisations in India in terms volume of financial transactions undertaken and the number of covered beneficiaries. Its headquarters is located in New Delhi. The main functions of the EPFO: Administers a compulsory contributory Provident Fund Scheme (1952), Pension Scheme (1995) and Insurance Scheme (1976).