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Home >Money >Personal Finance >NPS withdrawal: How the new Re 1 'penny drop' feature works

To protect the interest of NPS subscribers and for timely credit of amount in case of withdrawal, pension regulator PFRDA has said that Instant Bank Account verification by ‘penny drop’ would be adopted by CRAs or central recordkeeping agencies. A NPS or National Pension Scheme subscriber places a withdrawal or partial withdrawal request by mentioning the required details including the bank account number and IFSC code into which the withdrawal proceeds are to be credited. Once the withdrawal request is verified and authorized in the Central Record Keeping (CRA) system, the proceeds are credited to the subscriber's bank account through electronic mode.

However, in some instances, the subscribers' withdrawal amount do not get credited into the savings bank account (SBA) due to many account related issues like invalid account number/account type, invalid/wrong IFSC code, name mismatch, dormant/frozen account, account type mismatch etc.

NPS: What is ‘penny drop’ process

Through ‘penny drop’ process, central recordkeeping agencies check the active status of savings bank account and match the name in bank account number with the name in PRAN (Permanent Retirement Account Number) or as per the documents submitted.

The validity of account is verified by making a 'test transaction' by penny dropping a specified amount into the beneficiary’s savings and matching the name based on the penny drop response.

Re 1 may be credited in the savings account of the NPS beneficiary as part of penny drop process.

The ‘penny drop’ can happen at the time of processing of the Exit/Withdrawal request. The response of ‘Success’ or ‘Failure’ would be provided by the service provider based on validation of the savings account number name check as per CRA records.

If the bank account details and other details are not correct, the alternate account number or additional supporting documents are to be submitted for updating the records.

In case the penny drop fails at the time of processing, the subscribers will be informed to correct the bank account number and resubmit the application for withdrawal.

A small amount will be recovered from subscribers for the Instant Bank Account verification by penny drop:

(i) K Fin Technologies Pvt Ltd (KCRA)- Rs. 1.90+ tax

(ii) NSDL e-Governance infrastructure Pvt Ltd (NCRA) - Rs. 2.40 + tax

The above charges include Re 1 credited in the SBA of the beneficiary as part of penny drop process.


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