"Through 'penny drop' process, Central Record Keeping Agencies (CRAs) will check the active status of savings bank account (SBA) and match the subscribers' name in SBA number with the name in PRAN (Permanent Retirement Account Number) or as per the documents succumbed. The validity of account is verified by making a 'test transaction' by penny dropping a specified amount into the beneficiary's SBA and matching the name based on the penny drop response," the pension regulator said in a press statement.
'Penny drop' can happen at the time of processing of the exit or withdrawal request made by the subscriber. The response of 'success' or 'failure' will then be delivered by the service provider based on validation of the savings bank account number name check as per CRA accounts/records, it said.
If the bank account details and other details, as provided by the subscriber, do not match, then an alternate account number or additional supporting documents have to be submitted by the subscriber. So, if the penny drop fails at the time of processing, the nodal officer or PoP (Points of Presence) or subscribers will be told to correct the SBA number and again submit the application form/documents so that their withdrawal request can be processed in a timely manner.
CRAs may also use the 'penny drop' method for registration of entities wherever possible, it added.
How it works
Currently, while exiting (superannuation, premature or due to death) or partial withdrawal from the NPS, subscribers or PoPs initiat withdrawal request by mentioning the required particulars, including the SBA number and IFSC code into which the withdrawal proceeds are to be credited. Once the withdrawal process is confirmed and authorised in the CRA system, proceeds are transferred to the subscriber's savings account through electronically by the trustee bank.
There are cases when the subscribers' withdrawal amount could not be deposited into the SBA of the subscriber because of reasons such as invalid account number, wrong IFSC code, name mismatch, dormant account, account closed, the account does not exist, the account is inactive, the account is transferred, credit freeze account type mismatch, among others.
The money that could not be credited into the subscribers' SBA remained with Trustee Bank till the correct account number was obtained. This can be now overcome by using Instant Bank Account Verification.Instant Bank Account Verification by 'penny drop' needs to be adopted by CRAs by integrating their IT system and exit framework with the Fin-tech service providers, said the Pfrda press release.
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Never miss a story! Stay connected and informed with Mint.
our App Now!!