The Pension Fund Regulatory and Development Authority (PFRDA) issued a circular on 25th October, 2023 mandating the Penny Drop Verification for the withdrawal requests and for modifying the subscriber’s bank account details. This circular is a modification of a circular issued on 20th July, 2021.
Penny Drop Verification is a method of verifying a customer’s bank account information. The process involves depositing a small amount of money, usually a penny or a cent, into the customer’s bank account and then asking the customer to confirm the deposit. By verifying the amount of the deposit, the bank can ensure that the account information provided by the customer is correct.
In the present circular the penny drop verification has to be necessarily successful with name matching, for processing the Exit / Withdrawal requests. No request for Exit / Withdrawal, and or for modifying the subscriber’s bank account details shall be allowed in case of failure of penny drop verification by the Credit Rating Agency.
The Central Record-keeping Agency (CRA) also communicates with the nodal officer about the penny drop failure. Before executing any exit or withdrawal requests, the CRA performs verification and due diligence checks, especially if there has been a previous failure of penny drop verification.
The CRA is responsible for addressing penny drop failures by contacting the subscriber through mobile number and email, and advising them to contact their nodal officer. The CRAs are required to develop the necessary functionality and system-level utilities within 30 days of the issuance of the circular.
This circular has to be in effect from the issuance of the circular.