Big EPFO update: Funds in inoperative accounts to be credited; Check details

In a major relief for employees, the government has decided to clear and return funds lying in inoperative Employees’ Provident Fund Organisation (EPFO) accounts, with more than ₹30.52 crore set to be refunded to account holders or their legal heirs, as reported by PTI.

According to a labour ministry source, the Ministry of Labour and Employment reviewed the matter and approved the settlement of 7.11 lakh inoperative EPF accounts, each holding a balance of up to ₹1,000. The move is part of a broader effort to clean up and streamline dormant provident fund accounts.

What are inoperative EPF accounts?

An EPF account is classified as inoperative when no contributions are received from either the employee or employer for over 36 months. Despite being inactive, many such accounts still hold accumulated savings.

Currently, a total of 31.86 lakh inoperative EPF accounts exist, collectively holding around ₹10,903 crore. Out of these, over seven lakh accounts have balances of ₹1,000 or less, amounting to ₹30.52 crore.

How the refund will be processed

The ministry has confirmed that the amounts will be transferred directly to bank accounts that are linked with Aadhaar. In cases where the account holder is deceased, the funds will be credited to the nominee or legal heir.

Officials said the process will be carried out without requiring members to submit fresh claims in eligible cases, making the settlement faster and more efficient.

The government is also working on settling all remaining inoperative accounts in a phased manner. The objective is to ensure that rightful beneficiaries receive their money without delay.

This initiative is part of a larger reform effort to improve efficiency within EPFO and enhance service delivery to members.

EPFO 3.0 digital upgrade

Alongside the cleanup drive, EPFO is moving ahead with its digital transformation project, known as EPFO 3.0. The initiative aims to introduce a core banking system-enabled platform to simplify services, reduce paperwork, and speed up claim processing.

Under the upgraded system, claims cleared through risk assessment will be processed automatically without manual intervention. This is expected to reduce settlement time from nearly 20 days to less than three days.

The reforms are designed to improve transparency, minimise grievances, and provide members with faster access to their social security benefits.