Mandatory Penny drop verification – Instant Bank Account Verification for Enhanced Due Diligence w.r.t. Exit / Withdrawal
The PFRDA has issued a circular, PFRDA/2023/29/Sup-CRA/09, on 25th October 2023, mandating penny drop verification for enhanced due diligence regarding exit/withdrawal requests and subscriber bank account modifications in the National Pension System (NPS). This modification is based on a previous circular from July 2021. The circular outlines the importance of successful penny drop verification and the consequences of its failure.
PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY
CIRCULAR
Circular no: PFRDA/2023/29/Sup-CRA/09
25th October 2023
To
All NPS Stakeholders and Central Recordkeeping Agencies
Subject: Mandatory Penny drop verification – Instant Bank Account Verification for Enhanced Due Diligence w.r.t. Exit / Withdrawal requests and for modifying the subscriber’s bank account details
Reference is invited to the Circular no PFRDA/2021/21/SUP-NPST/2 dated 20th July 2021 on the subject Instant Bank Account Verification for enhanced due diligence under the Exit/Withdrawal process of NPS. Copy of the circular enclosed for ready reference.
2. Para 7 of the said Circular has been modified as under:
The penny drop verification has to be necessarily successful with name matching, for processing the Exit / Withdrawal requests, and also for modifying the subscriber’s bank account details. No request for Exit / Withdrawal, and or for modifying the subscriber’s bank account details shall be allowed in case of failure of penny drop verification by the CRA. The above-stated provision shall be applicable across sectors I.e. NPS, APY and NPS Lite for all types of Exits/withdrawals as well as for modification in subscribers’ bank account details.
3. In case of penny drop failure (irrespective of the reason), the same shall be taken up by the CRA with the concerned nodal office/intermediary for modification in bank account details in the subscriber account through set process and after following the proper due diligence.
4. CRA shall send communications to the subscriber on his/her mobile number and e-mail on the penny drop failure and advising him/her to contact his/her nodal officer or POP as the case may be. Simultaneously, the CRA has to send communication to the concerned nodal office or POP intimating about the failure of penny drop verification. The nodal offices and POPs are to be advised to update the details in the CRA system through S2 form or as per the set process, post which the processing of the exit/withdrawal can be taken up including re-verification of the bank account through penny drop verification. The withdrawal request proceeds are to be credited to the salary bank account of the subscriber in case of Govt Sector, as it has been stipulated vide Circular No. PFRDA/2015/27/EXIT/2 dated 12th November 2015.
5. CRA shall before execution of any Exit / withdrawal requests where there has been a failure of penny drop verification earlier, do proper verification through proper flagging mechanism in the CRA system and enhanced due diligence checks.
6. The enhanced due diligence advised above is to be effected immediately. CRAs must complete the development of said functionality & required system-level utilities within a period of 30 days from the date of issuance of this Circular.
Yours sincerely,
Digitally signed by K
MOHAN GANDHI
Chief General Manager
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