The Ministry of Labour and Employment is preparing a large clean‑up exercise within the Employees’ Provident Fund Organisation (EPFO). The plan involves automatically settling over 7.11 lakh inoperative EPF accounts and refunding balances of up to Rs 1,000 directly to members.
According to a PTI report citing official sources, around Rs 30.52 crore currently lying unclaimed in these small, inactive accounts will be credited straight to subscribers’ Aadhaar‑linked bank accounts. Importantly, no paperwork, claim form submission or physical visit to an EPFO office will be required.
What Has Been Decided?
The proposed drive will focus on 7.11 lakh inoperative accounts where the balance is Rs 1,000 or less. These accounts together hold Rs 30.52 crore.
Under the new mechanism, eligible subscribers will receive their funds automatically in their Aadhaar‑linked bank accounts. There will be no need to file a withdrawal application or undergo manual verification.
“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 was quoted as saying in the report.
In cases where the original subscriber has passed away, the amount will be released to the nominee or legal heir, ensuring that rightful beneficiaries are not deprived of their dues.
What Exactly Is An Inoperative EPF Account?
An EPF account becomes ‘inoperative’ if no contribution is received from the employer for more than 36 months. This typically happens when employees switch jobs without transferring their EPF balance, retire, or are simply unaware that a small amount remains in an old account.
Over time, these small balances accumulate across lakhs of accounts, creating administrative complexity and leaving money idle within the system.
The Bigger Picture: Rs 10,903 Crore Still Lying Idle
While the current exercise targets smaller balances, the broader issue is far larger. As per sources cited in the PTI report, nearly Rs 10,903 crore is currently lying in 31.86 lakh inoperative EPF accounts.
Of these, around seven lakh accounts, the ones being addressed first, contain balances of Rs 1,000 or less, amounting to Rs 30.52 crore. Officials have indicated that this clean‑up will be conducted in phases, suggesting that larger inoperative accounts may also come under review in the future.
This phased approach indicates that the initiative is not a one‑off measure but part of a systematic effort to tidy up dormant accounts.
Part Of A Larger EPFO Reform Agenda
The automatic refund proposal aligns with the government’s ongoing efforts to modernise EPFO operations and reduce procedural delays. Over the past year, the organisation has introduced greater automation in claim processing, adopted risk‑based verification to minimise manual checks, held regular review meetings to improve grievance redressal, and simplified KYC and Aadhaar integration.
The emphasis is clearly on digitisation, transparency and reducing dependency on physical paperwork, long considered pain points for EPF members.
EPFO 3.0: A Bigger Digital Shift Ahead
The clean‑up drive also comes ahead of the anticipated rollout of EPFO 3.0 from the next financial year. This ambitious digital overhaul aims to bring EPFO services under a Core Banking System (CBS)‑enabled framework.
The objective is straightforward: streamline processes, unify member services on a single digital platform, cut down paperwork, accelerate claim settlements and improve grievance tracking.
One of the most notable changes expected under EPFO 3.0 is the automatic processing of claims that clear risk management filters. Currently, claim settlement can take up to 20 days in certain cases. Under the proposed system, eligible claims could be settled in less than three days.
If implemented effectively, this shift could significantly reduce waiting periods and improve trust in the retirement fund system.
Why This Matters To You
For many salaried Indians, EPF remains the single largest long‑term savings instrument. Yet small balances often remain unclaimed due to lack of awareness, job transitions or procedural complexity.
By proactively refunding small inoperative balances, the government is signalling a more member‑centric approach. While Rs 30.52 crore may appear modest in the larger scheme of EPFO’s corpus, the message is significant: the system is moving towards proactive settlement rather than passive retention of idle funds.
