EPFO ropes in more banks, transaction cost to fall ₹300 cr/yr
Retirement fund manager Employees Provident Fund Organisation (EPFO) Wednesday joined hands with a group of banks including ICICI Bank and Kotak Mahindra Bank in a move to expand its service offerings and reduce transactions cost by at least ₹300 crore a year.
On the one hand, the move will help EPFO become more customer friendly by allowing employers and employees to remit and receive provident fund contributions/withdrawals and pension claims from a number of banks, on the other, it would help the organisation save ₹300 crore a year in transaction expenses.
“The banks have agreed to offer zero cost transactions helping us save money,” said labour minister Bandaru Dattartreya, who also heads the EPFO central board.
For 60 years, State Bank of India was EPFO’s sole banking partner. In December 2016, EPFO roped in four more nationalised banks: Punjab National Bank, Allahabad Bank, Union Bank and Indian Bank. On Wednesday EPFO tied up with five more — ICICI, Kotak, HDFC Bank, Bank of Baroda and Axis Bank.
“Yearly, we spend around ₹350 crore in terms of transaction charges. With 10 banks in our fold, it will reduce our cost by ₹300 crore,” central PF commissioner VP Joy said on the sidelines of the agreement signing event.
EPFO has now asked seven more banks — IDBI Bank, Canara Bank, Indian Overseas Bank, Bank of India, Bank of Maharashtra, Central Bank and Corporation Bank — to come on board. Once these banks join in, the EPFO will save another ₹40-45 core a year, lowering its annual transaction cost to less than ₹10 crore from ₹350 crore a year.