The Employees’ Provident Fund Organisation (EPFO) has approved a pilot initiative to automatically settle inoperative EPF accounts with balances of ₹1,000 or less, in a move aimed at simplifying withdrawals and ensuring faster access to funds for members.
Under the new system, small unclaimed balances will be directly credited to members’ Aadhaar-seeded and EPFO-linked bank accounts, eliminating the need for filing claims or completing additional paperwork.
Pilot Phase to Cover Over 1.3 Lakh Accounts
According to the Ministry of Labour and Employment, the first phase of the initiative will cover around 1.33 lakh inoperative EPF accounts with a combined balance of approximately ₹5.68 crore.
The reform aims to address long-pending balances that remain unclaimed due to procedural hurdles or inactive accounts.
Government officials noted that the auto-credit facility will allow funds to be transferred directly once the account holder’s identity and banking details are verified through Aadhaar linkage.
Direct Transfer Without Claims or Documentation
Under the pilot programme, eligible balances will be automatically transferred to verified bank accounts without requiring members to submit withdrawal applications.
The government stated that the reform is intended to reduce administrative delays and simplify the settlement process, particularly for small balances that often remain unclaimed for years.
If the pilot proves successful, the facility could eventually be extended to accounts with balances exceeding ₹1,000, further improving efficiency in provident fund settlements.
What Is an Inoperative EPF Account?
Under rules governing the Employees’ Provident Fund (EPF), an account becomes inoperative when no contributions are received for three continuous years after a member reaches 55 years of age or retires, whichever occurs later.
Additionally, under the Standard Operating Procedure issued on August 2, 2024, accounts that show no credit or debit activity for 36 months are classified as inoperative.
Once an account becomes inoperative, it is automatically blocked to prevent unauthorized withdrawals, and members typically need to complete verification procedures to access their funds.
The new pilot aims to bypass these lengthy processes for small balances, enabling quicker settlements and improving service delivery.
EPF Interest Rate for FY26
Separately, the Central Board of Trustees of the Employees’ Provident Fund Organisation has recommended an interest rate of 8.25% on EPF deposits for the financial year 2025–26.
The decision was taken during a meeting chaired by Mansukh Mandaviya, India’s Union Minister for Labour and Employment.
If approved by the government, this will mark the third consecutive year that the EPF interest rate has been maintained at 8.25%.
The new pilot project is part of broader efforts by EPFO to streamline fund management, reduce dormant balances, and improve accessibility for millions of provident fund members across India.
Summary:
The Employees’ Provident Fund Organisation has launched a pilot project to automatically settle inoperative EPF accounts with balances up to ₹1,000. Around 1.33 lakh accounts worth ₹5.68 crore will be covered in the first phase, with funds directly credited to Aadhaar-linked bank accounts without claims or paperwork. The move aims to simplify withdrawals and reduce unclaimed balances. Meanwhile, EPFO has recommended maintaining the EPF interest rate at 8.25% for FY26.
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