EPFO may raise automatic settlement limit from ₹1L to ₹5L
What's the story
The Employees's Provident Fund Organisation (EPFO) is mulling to increase the automatic settlement limit for advance claims from ₹1 lakh to ₹5 lakh, ANI reported.
The change, if implemented, would simplify the process of withdrawing money from provident accounts.
Sumita Dawra, Secretary at the Ministry of Labour and Employment, cleared the proposal at a recent meeting in Srinagar. It awaits approval from the Central Board of Trustees (CBT) now.
System details
Automatic settlement system: A brief overview
The automatic settlement system, introduced in April 2020 for illness-related claims, enables withdrawals without human intervention.
It was revised in May 2024 to include claims up to ₹1 lakh and now covers marriage, education, and housing expenses.
By March 6 this year, EPFO had settled over 2.16 crore claims via this automated method—a major jump from the previous fiscal year's 89.5 crore claims.
System efficiency
Efficiency and rejection rate of automatic settlement system
The EPFO claims that 95% of claims are settled within three days, due to a centralized IT-enabled system and reduced validation checks.
The rejection rate has also fallen from 50% to 30%, due to these streamlined procedures.
The IT system checks if a member's KYC is complete, bank details are valid, and eligibility criteria are met for automatic processing within 3-4 days. Ineligible claims are sent for manual review.
Process simplification
Plans to further simplify claim process
EPFO has already simplified the claim process by reducing validation steps from 27 to 18 and plans to streamline it further.
Increasing the limit to ₹5 lakh would do away with the need for manual approvals on higher-value withdrawals, making it especially beneficial during medical emergencies, home repairs, or education-related expenses.
This proposed change would significantly enhance the efficiency and convenience of fund withdrawal processes for EPFO members.