EPFO plans ATM and UPI withdrawals of PF under EPFO 3.0, but facility not yet live

Withdrawing money deposited in a provident fund (PF) account in a time of need has so far not been easy. Employees must first apply, then wait for verification, and then wait for the money to arrive. There is now word that the process may soon become simpler. The Employees' Provident Fund Organisation (EPFO) is preparing major changes to its digital system.

Under a new system called EPFO 3.0, a plan is being drawn up to let account holders withdraw PF money through ATMs and UPI. If the facility starts, account holders could get considerable relief when they need money for illness, children's education, marriage or housing-related expenses. However, the facility has not yet been started for everyone. Technical preparation and testing are currently under way.

At present, an account holder has to file an online claim to withdraw PF money. The money is deposited in the bank account only after the application is checked and approved. The new system is expected to make this much faster. Account holders would not have to file a claim and wait for approval every time, and could get the option of withdrawing the eligible amount as needed.

According to the proposal, the plan is to link the EPFO account with the banking network and the ATM or UPI system. Technical coordination is being prepared with the National Payments Corporation of India (NPCI) for this. In this system, the account holder's eligibility and the amount that can be withdrawn would be checked automatically. After the check, eligible members would be able to withdraw PF money from ATMs using an ATM card.

Withdrawal through UPI or the official EPFO app is also likely to be available. However, full official information has not yet been released on the final procedure, the transaction limit, the card required or other conditions. Account holders will therefore understand the correct procedure only after the service actually starts.

On how much PF can be withdrawn, the current rule is that at least 25 per cent of the balance must remain in the account. That means up to 75 per cent of the EPF amount deposited can be withdrawn for eligible reasons, and the remaining 25 per cent must be kept in the account. Withdrawal for education, marriage and essential housing-related expenses is permitted subject to certain conditions.

The 25 per cent left in the account continues to earn tax-free interest. For this reason, instead of withdrawing the entire PF, a portion stays in the account for future financial security.

Will the facility be available after Diwali? That cannot be said with certainty for now. Work on setting up the necessary digital arrangements under EPFO 3.0 and testing them is continuing. It is therefore not certain that every account holder will get the facility immediately after Diwali. If the plan is put into practice, raising money in an emergency could become easier, but an official announcement from EPFO is needed for the final rules and the date the service starts.