Retirement fund manager Employees Provident Fund Organisation (EPFO) 05 July 2017 joined hands with a group of banks including ICICI Bank and Kotak Mahindra Bank in a move to expand its service offerings and reduce transaction cost by at least Rs300 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 Rs300 crore a year in transaction expenses.
For 60 years, State Bank of India was EPFO’s sole banking partner. In December 2016, EPFO roped in four more nationalized 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.
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 RsRs40-Rs45 crore a year, lowering its annual transaction cost to less than Rs10 crore from nearly Rs350 crore a year.
The zero cost transaction service provided by banks may also reduce the administrative cost of EPFO, which would mean lower expenses for employers in dealing with the retirement fund manager. EPFO charges 0.65% from employers as administrative cost for managing employees’ PF corpus.