New Delhi: Come November, contributors to the Employees’ Provident Fund (EPF) will be able to access information on their savings and check whether previous employers had transferred contributions to their current company accounts by simply tapping in an access code online.
The Employees’ Provident Fund Organisation (EPFO), which is implementing the project, has set a deadline after repeated attempts to modernize what is the world’s biggest provident fund institution with 45.4 million subscribers.
Details are still being worked out on the complete range of features that will become available online, including quick settlement of dues, officials said.
EPFO had initially hired Siemens Information Systems Ltd to convert its manual accounting system into a digital data bank. A panel overseeing the modernization process, however, dropped the Mumbai-based company because of differences over delays and payments. Government-owned National Informatics Centre has since been appointed to update data across its 120 regional offices.
Vulnerable: Diamond workers in a factory near Surat. EPFO received many claims from workers in export sectors hit by the downturn. Amit Dave / Mint
“Claims will be processed seven days after receiving full information of the employee,” said P. Sudhakar Babu, additional central provident fund commissioner (compliance), with EPFO.
A record 10 million claims were received by EPFO in 2008-09, mostly led by “manpower supply companies” such as security agencies and information technology companies that have a high level of attrition. Claims also came in from depressed sectors, such as the jute industry, and certain export-oriented sectors hit by the economic downturn.
About 70%, or seven million cases, of these claims were cleared last year. Claim requests were the highest in urban centres such as New Delhi, Bangalore, Kolkata and Mumbai, where shifts in jobs as well as EPFO coverage are higher than the national average, Babu said.
According to latest EPFO statistics, Maharashtra, with one of the highest number of establishments at 83,000, has nearly eight million provident fund contributors, followed closely by Tamil Nadu at 62,000 units with about seven million contributors.
New Delhi has some 35,000 units, which is almost equivalent to the number of establishments in West Bengal and Karnataka. It has 2.1 million EPF subscribers, while West Bengal and Karnataka have 2.6 million and 4.5 million account holders, respectively.
Maharashtra represents 16% of total provident fund coverage nationwide, while Tamil Nadu is pegged at 12% and New Delhi 6%.
Several challenges, however, remain for EPFO.
A large number of claims cannot be processed because of incomplete filings by establishments. Companies often do not send employee details within the stipulated five days of an employee leaving the company.
“They send us (data) in bulk, which causes delay in processing. We have asked volume-based companies (big employers) to regularly update this information,” said additional central commissioner Babu.
An official at the New Delhi regional commissioner’s office said the rate of default is between 20% and 25% every year and 500-600 companies paid a penalty last year.
In the last three months, around 55,000 claims were cleared by the regional office of south Delhi, alone.
Many are sceptical whether the online process will actually take off on time. “It’s possible to turn online,” said Sushil Kumar Jain, chairman of accounting firm Sushil Jeetpuria and Co. “But before this, the department should collect online data from the employers and clear the backlog.”