EPFO update: Refund for 7 lakh inactive PF accounts soon. Eligibility, process & timeline explained

In a move set to benefit lakhs of subscribers, the Labour Ministry has decided to refund small balances lying in inoperative accounts under the Employees' Provident Fund Organisation (EPFO).

The decision covers inoperative EPF accounts with balances of ₹1,000 or less. In such cases, the refund will be processed automatically, without any paperwork.

Account holders will not need to submit applications or visit EPFO offices. The amount will be directly credited to their linked bank accounts. "A total of Rs 30.52 crore stuck in over seven lakh inoperative accounts of the retirement fund body EPFO will soon be returned to the account holders or their legal heirs," a labour ministry source said on Monday, PTI reported.

The Ministry of Labour & Employment, in a review meeting, decided to settle 7.11 lakh inoperative accounts of EPFO, each having a balance of up to Rs 1,000, the source added.

What is an EPF inoperative account?

The provident fund account, which has not received any contribution either from the employee or from the employer in more than 36 months, is referred at inoperative.

₹10,903 crore lying in inoperative EPF accounts

Of these, nearly seven lakh accounts hold balances of ₹1,000 or less, amounting to ₹30.52 crore in post-retirement funds.

Direct transfers for Aadhaar-linked accounts

The accumulated amounts will be directly transferred to the bank accounts of EPF members whose accounts are linked with Aadhaar.

In cases where the account holder has passed away, the funds will be released to the nominee or legal heir, ensuring rightful beneficiaries receive the dues.

Ministry begins comprehensive account cleanup

The Labour Ministry has initiated a drive to clean up all EPF accounts. Officials said that all inoperative accounts will be reviewed and settled in a phased manner, with funds returned to eligible beneficiaries over time.

EPFO 3.0: Digital push to improve member services

The initiative aims to modernise EPFO services by introducing Core Banking System (CBS)-enabled facilities, allowing members and establishments to access services more efficiently.

• Streamlining processes

• Reducing paperwork

• Enabling faster claim settlements

• Providing a unified platform for all member services

• Faster claims: Settlement time cut to under 3 days

Under the new system, claims that clear risk management checks will be processed automatically, without manual intervention.

This automation is expected to reduce claim settlement time from up to 20 days to less than three days.

In order to monitor the effectiveness of these new features in reducing member grievances and processing time, the EPFO conducts regular meetings to review the qualitative and quantitative aspects of grievance handling and their resolution.