In a significant development for National Pension System (NPS) investors, the Pension Fund Regulatory and Development Authority (PFRDA) has introduced a crucial ‘Penny Drop’ verification requirement for individuals looking to withdraw funds from their NPS accounts.
This move is aimed at streamlining the process and ensuring the prompt transfer of investors’ funds.
Mandatory Penny Drop Verification:
Under the ‘Penny Drop’ verification process, Central Record Keeping Agencies (CRAs) will conduct an assessment of the active status of the bank savings accounts linked to NPS.
They will gather essential information, including the bank account number and the Permanent Retirement Account Number (PRAN) or the provided number, while cross-referencing the names provided in the submitted documents.
Applicability Across the Board:
These updated provisions will apply to various types of withdrawals within the National Pension System, Atal Pension Yojana (APY), and NPS Lite.
Additionally, it encompasses changes in the bank account details of customers.
Understanding Penny Drop Verification:
Penny Drop verification is a process designed to validate the legitimacy of an account by conducting a ‘test transaction.’
This involves depositing a small amount into the beneficiary’s bank account and confirming that the name aligns with the provided Penny Drop response.
According to a recent notification issued by PFRDA, the successful completion of Penny Drop verification is a prerequisite for name matching, processing exit/withdrawal applications, and making modifications to a customer’s bank account details.
This rule aims to enhance the security and accuracy of NPS transactions, ensuring a seamless experience for investors.
