The Pension Fund Regulatory and Development Authority (PFRDA) introduced an advanced bank account verification mode through PAN-PRAN-VPA (UPI) of subscribers with interesting features. Through this feature, the National Payments Corporation of India (NPCI) will confirm the information about the joint account holders, their UPI IDs and PANs, which are matched with the Permanent Retirement Acct Numbers (PRAN).
Currently, the CAMS CRA offers its associated subscribers the PAN-PRAN-VPA (UPI) feature. The regulator encouraged all CRAs and intermediaries to integrate subscribers’ digital journey with emerging technology like PAN-PRAN- VPA (UPI) verification provided by the NPCI.
Benefits of PAN-PRAN-VPA (UPI) verification
Below are some of the benefits of the PAN-PRAN-VPA (UPI) feature:
- Eliminates errors in the payout process
- Timely and successful processing of subscriber withdrawal requests who is a joint holder in the bank account
- Simplified and binary NPCI’s response, i.e. inactive/active
- Matching of bank account and PAN seeded in PRAN
- Works when the subscriber is the second/third holder of the account (penny-drop mechanism returns only the first account holder name)
- Eliminating issues arising from longer names since the penny-drop process returns incomplete/curtailed names
- Logical and easier approach than the penny-drop mechanism, which uses fuzzy logic of name matching
How does new bank account verification work?
The VPA (UPI) and PAN operate on the NPCI network and bank accounts linked with PAN. The users’ PAN, account number and IFSC will be sent to the NPCI to check if the PAN in the bank is linked with the account number.
When the account number and PAN are linked, the NPCI will give the return response as ‘Y’ along with the account holder’s name. It will also return the account type, UPI ID and bank account status.
When the account number and PAN are not linked, the NPCI will give the return response as ‘N’. Since this process returns a value in binary (inactive/active), it is more potent than the penny-drop process, which is dependent on the fuzzy logic of name matching.
Currently, the insurance industry, mutual funds and NBFCs extensively use this facility to change bank mandates and onboard new customers. Mutual funds also use this facility to verify third-party investments.
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