Easy Onboarding and Exit from NPS Through VCIP

The Pension Fund Regulatory and Development Authority (PFRDA) on Wednesday issued a circular introducing Video-Based Customer Identification Process (VCIP) for the National Pension Scheme (NPS). NPS is a social security scheme by the Central Government for the employees of the public, private and even the unorganised sectors. People prefer to enter this scheme as they receive a pension post-retirement under this scheme from the amount invested by them during their employment. This scheme provides a certain amount to an individual after his retirement for leading his retirement life. 

PFRDA regulates NPS, and it has been introducing various modes of KYC and authentication process to make the subscriber onboarding, exit and processing of service requests seamless and subscriber friendly. PFRDA has already introduced eSign, offline Aadhaar based KYC, third party reliance for KYC, paperless onboarding and e-exit for eNPS subscribers.

Even after introducing so many features online, the NPS subscribers faced difficulties. There is a requirement of the physical presence of the subscribers before the Point of Presence (PoPs) for in-person verification to complete the exit process and other services. This requirement of physical presence caused hardship to both the subscribers and the PoPs.

Also Read: What is your capital gains tax? How do you report in the ITR?

It also caused a delay in the process which led to the subscribers raising grievances. VCIP will help the subscribers and the PoPs to open NPS accounts, exit accounts and provide other services quickly as subscribers verification is online and there is no requirement of the physical presence of subscribers.

The registered intermediaries of the PFRDA can use VCIP for onboarding, exit or any other services related to NPS. VCIP overcomes the challenges of limited mobility, remote presence, social distancing norms, contactless service, etc. It helps the subscribers immensely in this present pandemic situation as it eliminates the need for the physical presence of subscribers in front of the PoPs or Nodal officers while onboarding or exiting from NPS.

VCIP makes the account opening process paperless, convenient, instantaneous and cost-effective thus paving the way for more people to subscribe to it. It also optimises the turnaround time of account opening, execution of exit and processing of other service requests. Several registered PoPs are functioning online without having a physical presence across locations. VCIP will enable these PoPs to source subscribers under NPS easily, provide service to them and carry out the exit process with proper due diligence as OTP/e-Sign based authentication is paperless under it.

The circular introducing VCIP provides the process to be adopted by PoPs registered solely with PFRDA in the annexure to it. The PoPs registered with other financial sector regulations can comply with the VCIP guidelines issued by those regulators. This circular also urges the PoPs to build an online platform to develop VCIP in association with the Central Record Keeping Agencies (CRAs).

With the introduction of VCIP, soon the subscribers can open accounts using the video KYC process. Even the NPS withdrawals and processing of any other service will become easier. VCIP will help the subscribers and PoPs to comply with the process of opening and exiting NPS accounts faster. In the present situation, VCIP paperless and online verification provides relief to the subscribers of NPS. 

For any clarifications/feedback on the topic, please contact the writer at mayashree.acharya@cleartax.in

You May Also Like

Taxation of dividend income received on or after 1 April 2020 (FY 2020-21)

You may receive a dividend from your equity or mutual fund investments.…

Know the taxation rules for income F&O trading

Futures and options are stock derivatives that are traded in the stock…

Important Cash Transaction Limits and Penalties Under Income Tax That You Need to Know About

In India, there are a lot of transactions that go unaccounted for,…

What is the TDS provision for rent paid by individuals above Rs 50,000?

Many people are unaware of TDS provisions while paying rent on the…