The Pension Fund Regulatory and Development Authority (PFRDA) has decided to allow intermediaries to use technological intervention by using Video-Based Customer Identification Process (VCIP) as an additional due diligence mechanism when processing withdrawal claims in the event of the death of NPS subscribers.
The PFRDA in its circular dated January 04, 2023, shared, “In line with the technological advancements and for ensuring seamless exit claim processing, it has been decided to allow the intermediaries to use technological intervention by using VCIP as an added due diligence mechanism for verification of the nominee/claimant/legal heir while processing the withdrawal claims in case of death of NPS subscribers.”
Earlier, on October 06, 2020, the PFRDA had permitted intermediaries to use VCIP for any NPS-related services, inclusive of both entry and exit.
According to the recent PFRDA circular, PFRDA received representations from intermediaries who sought Video Based Customer Identification Process (VCIP) for the processing of withdrawal claims in favour of nominees/claimants/legal heirs due to the untimely death of NPS subscribers.
The VCIP supports the intermediaries' current due diligence efforts by strengthening the process' security by confirming that the nominee/claimant/legal heir is the same person who submits the documentation for processing the claim and by keeping a video record of the transaction. The nominee's credentials can be verified using Aadhaar e-KYC or DigiLocker.
Details in the latest circular state “the process is optional for use by the intermediaries. However, PFRDA advises PoPs, especially Online PoPs to use the emerging technology for enhanced due diligence and error-free/ timely processing of claims. NPS Trust may also use the above process while processing e-NPS death claims,” adding, “All the intermediaries are hereby informed to use Instant Bank Account Verification through penny drop to verify claimants’ bank account information as part of claim processing which allows independent verification of Bank Account and name matching.”
Intermediaries who are registered with PFRDA as well as other financial sector regulators are permitted to follow the VCIP guidelines issued by those regulators for carrying out NPS-related activities.