To overcome the challenges and to ease process of contribution uploaded by nodal officers, PFRDA has introduced NACH mandate jointly hosted by trustee bank and central record keeping agency
To curb the existing challenges in fund tranfer process, Pension Fund Regulatory and Development Authority has enabled the National Automated Clearing House (NACH) mandate in NPS transaction. With the help of NACH mandate, the complete transaction process will become digital for Point of Presence (PoP) and other NPS distributors.
At present, the nodal offices deposit NPS contributions of associated subscribers by preparing subscriber contribution file (SCF) and upload the same in “NPSCAN system" after validating it. Thereafter, the nodal office visits the accredited bank to transfer the funds (equivalent to the amount uploaded in the SCF) to the trustee bank appointed by PFRDA.
Challenges in the existing process
PFRDA has observed instances wherein the transferred contributions are returned due to certain errors. For instance, the non-mentioning of transaction ID in the inward message while transferring the funds which is a mandatory field. Other issues are invalid 7-digit account number, remittance made by offices for expired transaction ID, amount mismatch between the file and actual amount remitted, FRC completed previously, non-existence of transaction ID provided in CRA system, duplicate fund received on the same day, etc.
Further, on many occasions, nodal officers find it difficult to visit their accredited bank branch for transfer of amount due to Covid induced lockdown restrictions and social distancing norms. Hence, the amount is not remitted in a timely manner which adversely affects the investment benefits to subscribers.
Proposed NACH mandate process
To overcome the challenges and to ease the process of contribution uploaded by nodal officers, PFRDA has introduced the mandate jointly hosted by trustee bank and central record keeping agency (CRA) through NACH operated by National Payments Corporation of India (NPCI).
The NACH mandate is technology-enabled which offers end to end solution and is a secured mode of contribution fund transfer. Under NACH mandate, all the nodal offices have to provide the 'one-time mandate registration' for auto debiting their bank accounts with the amount based on the SCF uploaded in NPSCAN. The facility can also be availed by POPs/corporate. There is no additional cost to avail the facility.
Benefits of NACH mandate
It empowers nodal officers by helping overcome the challenges. Further, there will be timely investment due to timely remittance of funds. The process will eliminate the visit by nodal officers/POPs to their bank for transfer of funds.
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