Edited by: Namit Singh Sengar
Last updated: January 17, 2023, 4:13 PM IST
The Pension Fund Regulatory & Development Authority (PFRDA) recently announced its new bank account and PAN authentication process for National Pension System (NPS) subscribers. The system uses the NPCI Framework, which means a complete end-to-end digital process.
An initiative of the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA), National Payments Corporation of India (NPCI) is an umbrella organization for operating retail payment and settlement systems in India.
PFRDA regulates NPS, endorsed by employees of Govt. of India, state governments and by employees of private institutions/organizations and unorganized sectors.
What is the PFRDA PAN-PRAN-VPA(UPI) System?
PFRDA said that it is an advanced mode of bank account verification of the NPS subscribers (PAN-PRAN-VPA (UPI) where the joint holder details, PAN and UPI IDs are verified through NPCI and linked to the permanent retirement account number (PRAN ).
Why was the system introduced?
PFRDA said the latest process has significantly reduced returns on funds due to incorrect bank account information, improved processing turnaround time and served as an additional due diligence mechanism to verify beneficiaries’ credentials as they process their withdrawal claims.
Benefits of PAN-PRAN-VPA(UPI)
PFRDA has listed a number of advantages of the new system. They contain;
– Eliminate errors in the payout process
– NPCI binary and simplified response i.e. Active/Inactive simplifies the due diligence process over the previous penny-drop framework that relied on fuzzy name-match logic.
– Matching of PAN seeded in PRAN and bank account
– Timely processing of withdrawal request from subscriber who is joint holder of bank account.
The PAN-PRAN-VPA(UPI) procedure works on the NPCI Framework. Below are the mentioned steps for better subscriber understanding.
PAN and VPA rides (UPI) ride on the NPCI network and PAN link to bank accounts.
1. User PAN + Account number + IFSC (Bank code of the bank mentioned by the subscriber) are sent as a request to NPCI to check if the account number is linked
with PAN on the bench.
2. If the account number and PAN are linked at the bank, NPCI returns the return answer as Y along with the name of the account holder at the bank. It also returns the UPI ID (if any), account type, bank account status (active/inactive).
3. If account number and PAN are not linked to the bank, NPCI returns the return response as N with no subscriber details.
The benefits of using bank account verification using PAN and VPA (UPI) are as follows:
a. Fast and prompt response.
b. Works even when the subscriber is the second or third holder of the account
c. Eliminating problems arising from longer names as a penny-drop process sometimes produces incomplete/shortened names.
d. Easier and more logical approach than penny drop which uses fuzzy name match logic.
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