- If you are applying for PF withdrawal to tide over the cash crunch due to the lockdown, keep these things in mind to avoid delay or rejection of claim
- Remember that after EPFO processes the application, banks may take some time to credit the money
In March-end, the government came to the rescue of people facing a cash crunch due to the covid-19 lockdown, by allowing them to take non-refundable advance from Employees’ Provident Fund (EPF). As per the data released by EPF Organisation on 28 April, 740,000 such claims have been settled. However, it seems, many more who made a similar application are still waiting to get their money. Many subscribers took to social media to complain about delays in receiving the money or rejection of claims.
Employees are allowed to withdraw up to 75% of the outstanding balance in their PF accounts or three months basic plus dearness allowance, whichever is lower. For example, if you have a balance of ₹1 lakh in your PF account and your basic wage plus dearness allowance is equal to ₹20,000 per month, you will be eligible to withdraw only ₹60,000.
EPFO has clarified that even those employees who have left the job can avail the advance. Employees can apply for the advance under such claims online. However, it is generally advised not to withdraw from PF savings, as it will deplete your retirement savings by a large chunk. But dipping into PF savings may be better than taking a personal loan on which the interest rates can be in the range of 9-24%.
“The claims applied under covid-19 are being settled on fast track and within three working days,” said EPFO, in a statement along with FAQs (frequently asked questions) released on 26 April.
So what explains the delay and rejections? “All the claims applied online go to the National Data Center of EPFO and are getting processed from there. However, in case of any discrepancy, the claims are sent to the regional offices for clearing,” said one of the EPFO field officers from the Gurugram office, on the condition of anonymity, as filed officers are not autorized to speak to the media.
Here are some of the reasons leading to delay or claim rejection.
Unclear scan of documents
While filing a claim online, an employee has to upload a scanned copy of the cheque book, the first page of the passbook or the bank account statement, which should have the name of the applicant, bank account number and the IFSC code. This is done to ensure that the bank account details uploaded in the KYC (know your customer) or linked to the universal account number (UAN) of the employee is correct and no erroneous transfer of money happens.
If the document’s scan is not clear, it is difficult to match the details with what is provided against the employee’s UAN. This can result in delay as EPFO will ask you to upload the scanned copy again. “Most of the delays or rejections are due to improper documents uploaded by the employees,” said the field officer.
So, upload a clear scan of the document showing the bank account details.
At times, details such as IFSC code of the bank or the account mentioned during the claim doesn’t match with what is seeded with the UAN. This could be because wrong details may have been entered when seeding account details with the UAN or because the subscriber wants the amount credited in another account, which is not linked with the UAN.
“There is also a possibility that the bank account linked with the UAN might have become dormant. Therefore, the person will have to get the bank details updated. The updation of bank account details can be done online,” said Saraswathi Kasturirangan, partner, Deloitte India.
However, any changes made to the KYC details have to be approved by the employer. “Employers can approve the changes online using their digital signature, but at times the employers are not able to access their system due to the ongoing lockdown, which may result in a delay,” said the EPFO field officer quoted earlier.
Not fulfilling the criteria
To be able to take the non-refundable advance, employees should have made a contribution for at least three months. If you don’t fulfil this basic criteria and still make a claim, it might be rejected.
Time taken by banks
EPFO processes claims and issues the cheques to the bank within three days of applying the claim. Banks, typically, take another one to three days to credit the money to the employee’s account. So check if the delay is at the bank’s end.
Keep in mind that it’s important that your paperwork is in order and your records match with what’s seeded with your UAN for problem-free withdrawal.