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EPFO – Social Security and Social Change though Digitization

Our Mission is to extend the Reach and Quality of Publicly Managed Old-Age Income Security Programs through consistent and ever-improving standards of compliance and benefit delivery in a manner that wins the approval and confidence of members in our methods, fairness, honesty, and integrity, thereby contributing to the economic and social well-being of members.


1. EPFO – An Overview

1. EPFO – An Overview

The Employee Provident Fund Organization (EPFO) stands as a significant entity of the Government of India (GoI), operating under the supervision of the Ministry of Labour and Employment. Established shortly after India gained independence, the primary aim of EPFO is to provide social security to workers in the industrial sector and their dependents. This broad mandate has positioned EPFO as one of the largest global organizations dedicated to social security, overseeing an impressive count of over 150-million-member accounts. This organization serves employees from both public and private sectors, particularly those employed in establishments with 20 or more workers, earning up to INR 15,000 per month.

The roots of EPFO can be traced back to the introduction of the Employees’ Provident Funds Ordinance in 1951, subsequently replaced by the comprehensive Employees’ Provident Funds Act of 1952. Presently known as the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, this legislative framework holds authority across the country except for the region of Jammu and Kashmir. The formal establishment of EPFO occurred on November 1, 1952, marked by the creation of a tripartite board consisting of the Central Board of Trustees, the Employees’ Provident Fund, and representatives from employer organizations.

Over the years, EPFO’s impact has grown substantially. Its early years witnessed enrolment figures of 1,267 organizations and 542,904 members in the years 1952-54. In contrast, the more recent data for 2016-17 demonstrates a remarkable expansion to 9.26 lakh organizations and 4.6 crore members across a diverse spectrum of industries. Notable sectors covered include cement, cigarettes, electrical and mechanical engineering, iron and steel, and textiles.

1.2 Operational Schemes

EPFO operates three core schemes:

  1. EPF Scheme 1952: It allows employees to systematically save a portion of their income on a monthly basis, accumulating with interest over time. Upon retirement, death, or in cases of specific family needs, such as education, marriage, illness, or property purchase, partial withdrawals can be made.
  2. Pension Scheme 1995 (EPS): It provides a structured framework for granting monthly pensions to employees, their survivors, or dependents upon retirement or in the event of the employee’s death. In cases of partial disability, the scheme also permits partial pensions.
  3. Insurance Scheme 1976 (EDLI): It offers crucial protection to employees, safeguarding against accidents or death linked to their PF account during their period of employment.
1.3 EPFO Administration
  • Operational Framework and Management: EPFO’s operational architecture comprises a network of 120 offices dispersed throughout India as of 2016. These offices handle a significant annual workload of 1.2 crore claims. Historically, claims were processed manually, necessitating signatures from both employees and employers, along with meticulous record verification. Technology infrastructure at that time was limited and localized.
  • Contribution and Administration: According to mandated guidelines, employee members contribute 12% of their salary on a monthly basis to their EPF accounts. Simultaneously, employer members are obligated to deposit 12.5% of employees’ wages monthly into their EPF accounts. To facilitate these transactions, each member is required to maintain a personal bank account in a nationalized bank.
  • Administrative Guidelines and Fund Management: The Central Board of Trustees (CBT) of EPFO has articulated comprehensive administrative guidelines governing fund withdrawals, individual EPF account transfers, and employer remittances. EPF funds are managed by portfolio managers appointed by the CBT, who invest these funds strategically across various financial instruments to optimize interest revenue. CBT periodically proposes policies and guidelines for effective investments and fund management, aiming to maximize returns while ensuring the financial well-being of EPFO’s vast membership base.
1.4 Three Major Operational Processes

The fundamental operational structure of EPFO is defined by the following three major processes.

  1. Coverage Process: The Employees’ Provident Fund and Miscellaneous Provisions Act of 1952 is applicable to factories involved in industries listed in Schedule-I of the Act, as well as other establishments that have been notified and employ 20 or more workers. Prior to the digital age, employers used to voluntarily register themselves to provide coverage for their eligible employees. There were no stringent regulations to ensure or validate the enrolment of organizations falling under the purview of EPFO coverage, unless a formal complaint was filed against a non-compliant organization. However, an establishment that doesn’t fall under the Act’s requirements can choose to be covered voluntarily. This can happen if both the employer and the majority of its employees agree to apply the provisions of the Act to their establishment under section 1(4) of the Act. This agreement would specify the effective date of coverage, either from the agreement date itself or any subsequent date outlined in the agreement. The current mechanism allows two modes for coverage:
    • Application by the establishment
    • By EPFO field offices
  2. Compliance Process: After being brought under the purview of EPFO, member organizations are obligated to adhere to the regulations outlined in the act, as well as the three schemes established by EPFO. These schemes are the Employees’ Provident Fund Scheme of 1952, the Employees’ Pension Scheme of 1995, and the Employees Deposit-Linked Insurance Scheme of 1976. This entails enrolling their employees as fund members, deducting provident fund contributions from employees’ salaries, and depositing their corresponding portion as employers’ contributions into the employees’ EPF accounts.
  3. Benefit Delivery: The following three schemes are framed under the EPF act and administered by EPFO for smooth delivery of benefits to entitled member employees. Details are provided in Exhibit 2.
    • The inception of the Employees’ Provident Funds Scheme 1952 (EPF) dates back to November 1st, 1952.
    • On November 16th, 1995, the Employees’ Pension Scheme 1995 (EPS) was introduced, replacing the Employees’ Family Pension Scheme 1971.
    • The Employees’ Deposit Linked Insurance Scheme 1976 (EDLI) came into effect on August 1st, 1976.
1.5 Core Objectives of EPFO
  • EPFO’s central aim is to offer social security to economically vulnerable industrial employees through various schemes.
  • The Central Board of Trustees (CBT) oversees employees’ and employers’ contributions as custodian.
  • Managing EPFO funds efficiently is crucial, ensuring funds are accessible for legitimate employee needs.
  • Compliance by employer organizations is vital to uphold employee-centric administration.
  • EPFO tackles challenges summarized in Appendix 2, including maintaining a balance between employees’ and employers’ welfare, providing sustainable social security, and addressing stakeholder concerns.
2. Digitalization of Government Institutions

2. Digitalization of Government Institutions

Over the past few decades, India’s governance institutions have seen a major shift, led by remarkable advancements in the field of information technology (IT). This progress has propelled India into a new era of digital transformation. The traditional methods of delivering public services have been revolutionized, paving the way for an enriched governance structure.

The key points of this digital transformation are:

  1. Democratization of Services: Government services are now commonly accessible to the common citizen. IT services have become mass-market oriented and are accessible free of cost (or at low costs) now, owing to elimination of middlemen and direct interaction between the government and the beneficiary through IT.
  2. Transparency and Accessibility: Transparency and access to information stand as the pillars of this digital change. Each service is now traceable and identifiable, which aids in later evaluations to assess the system’s effectiveness and pinpoint areas for improvement easily.
  3. Affordability Factor: The increasing affordability and prevalence of smartphones, coupled with decreasing data costs, have made state-provided digital services more accessible to a significant portion of the population.
  4. Challenges to e-Governance: Despite the strides made, the path to e-governance is not devoid of obstacles. Due to significant illiteracy rates and lack of knowledge regarding operation of smartphones/PCs among a group of people, it cannot be fully implemented.

The digital revolution continues to unfold reflecting the dynamism and adaptability of India’s governance systems in the digital age.

The impact on various groups due to digitization initiatives can be seen in Table 1.

  Effect Socio – Economic Inclusion Result
Businesses Capital Utilisation Trade Growth Newer Startups
Peoplea Increased Labour Productivity More Jobs Personal Growth
Government Efficient Operations More Public Participation Increased Public-Govt. Connection
Source: World Bank (2016), as quoted in Shenglin et al. (2017)

Indian society has deep-rooted divisions based on factors like caste, class, ethnicity, geography, and religion. Furthermore, a new division has surfaced linked to the accessibility of digital opportunities. In recent decades, governments worldwide, including India, have allocated substantial resources to develop and implement electronic government (e-government) systems and applications. The influence of this technological revolution goes beyond the economy, extending its impact to areas like culture and politics (Kassen, 2014).

E-government, commonly associated with modern, swift, and effective public service administration, entails government agencies utilizing information technology to deliver services to individuals, businesses, and other governmental bodies (Lee, 2004). It is seen as a means to achieve reform by promoting transparency, removing barriers, and engaging citizens in political processes (World Bank, 2002). E-governance directly impacts citizens, employees of various firms (in case of EPFO), businesses in their respective country as well as the government itself as main aim of e-government is easing processes. All in all, E-governments benefit individuals, organisations both internally and externally.  

2.1 Digital Transformation

Governments worldwide, including India, have embraced technological advancements to improve the lives of citizens through accessible technology-led solutions. With the increasing adoption of digital transformation initiatives across nations and federal states, the concept of ‘open government’ has gained prominence. Open Government aims to be more responsive, adaptable, and accessible, empowering citizens and enhancing democratic societies’ capacity to address challenges effectively and fairly (Schuler, 2010, p. 92). This shift emphasizes skills such as collaboration, stakeholder engagement, creativity, and analysis rather than just controlling information (Eaves, 2010, p. 150).

2.2 Open Government

The concept of open government is centered around empowering citizens and bolstering democratic societies by ensuring adaptability and accessibility. Governments around the globe have actively embraced technology-driven solutions to enrich citizens’ lives and harness the potential presented by technological advancements. Aligned with its definition, the concept of open government offers a captivating array of ideas aimed at reshaping governance to effectively, sustainably, and equitably address societal challenges (Schuler, 2010, p. 92). The authors go on to expound upon this shift by emphasizing that in such a system, the locus of power and influence shifts from controlling information to a new set of skills: the ability to convene, collaborate, engage stakeholders, demonstrate creativity, and analyze (Eaves, 2010, p. 150). Consequently, governments across the world have wholeheartedly embraced the diverse range of opportunities brought forth by technological progress and easily accessible technology-driven solutions to enhance the well-being of their citizens.

It can be reasonably deduced that the conception of Common Service Centres (CSCs) was aimed at bridging the “digital divide” in a country like India, where rural regions constitute a significant segment of the population, and notable disparities in consumption patterns exist between rural and urban areas. CSCs were envisaged to provide a multitude of services through digital empowerment, catering to the needs of nearly a billion individuals residing in rural India. Hence, the present article seeks to explore and discuss potential challenges and obstacles encountered during the establishment and operation of CSCs, with the objective of mitigating setbacks in this pivotal initiative.

As established, the proactive duty of making government information available to the public should not be perceived as the ultimate goal. Rather, it serves as a mechanism to empower the public to engage more actively with the government, revitalizing the essence of “We the people” (Bass & Moulton, 2010, p. 303).

3. Common Services Centres: An Overview

3. Common Services Centres: An Overview

The Common Services Centres (CSCs) have emerged as a crucial initiative under the Ministry of Electronics & IT, aligning with the National E-governance Plan (NeGP). This comprehensive strategy was approved by the Indian Government in May 2006, aiming to facilitate widespread e-governance. Initially established based on the Companies Act, 1956, the CSC concept underwent revitalization and emerged as the CSC 2.0 scheme in 2015, expanding its scope and influence. Positioned as a central mission within the framework of the Digital India Programme, CSCs function as a nationwide network that harmonizes India’s diverse regional, linguistic, and cultural landscape. This structure aligns with the government’s vision of nurturing an all-encompassing society, emphasizing social, financial, and digital inclusion.

The primary objective of the CSC initiative is to transform the delivery of public services, reducing costs by improving efficiency and effectiveness, promoting transparency, and simplifying bureaucratic procedures. Through these efforts, the overarching goal is to enhance the overall quality of life, particularly for residents in rural and remote areas (Dwivedi et al., 2016). However, it’s worth noting that the complete range of benefits from such systems is still being realized in numerous countries, especially in the context of developing and least developed nations.

Given that the CSC endeavour is the world’s most extensive ICT project in the second-most populous nation, it holds significant potential for fostering ICT literacy and its practical applications to enrich the lives of citizens (Datta & Saxena, 2013).

The COVID-19 pandemic has opened doors for the implementation of significant changes. Common Service Centres have expanded their role to provide banking solutions through the Aadhaar-enabled payment system. With a substantial technological advancement aimed at enhancing healthcare services, these CSCs now function as telemedicine platforms, offering a wide array of consultations encompassing allopathic, homeopathic, and ayurvedic approaches (Source: The Economic Times, 2020).

3.1 Critical Challenges Faced by CSC Initiative

Despite the extensive establishment of these centers across the country, the CSC initiative, being a comprehensive IT project, encounters several challenges. Firstly, it’s crucial to recognize that the CSC operates as a technology-centric entity with the intention of serving the general public. Secondly, the success of the CSC heavily relies on the widespread adoption of technology by its beneficiaries. Thirdly, it’s essential to ensure that the overall user experience leaves a positive impression. Additionally, maintaining the consistent quality and sufficiency of services over time presents a notable hurdle. These challenges are particularly pronounced in emerging economies such as India, where a significant portion of the population resides in remote rural areas and possesses limited formal education. As a consequence, this creates a substantial digital divide at various levels (Bruno Lanvin, as cited in OECD, 2008).

4. Process Reengineering and Digitalization

4. Process Reengineering and Digitalization

The notion of Process Reengineering and Digitalization had its origins in 1983 when endeavours were undertaken to computerize and curtail paper-based transactions. Computer Maintenance Corporation (CMC) consultants were enlisted to aid in this process, resulting in the installation of an in-house computer after a six-year struggle due to internal resistance to change. With the cooperation of the EPF staff federation, certain processes were eventually computerized. In 2010-11, a digitalization project was set in motion to provide efficient, accessible, and timely services to subscribers and employers. In collaboration with the National Informatics Centre (NIC), the project was executed in phases. It commenced with the development of basic claim processing software, progressively evolving to minimize reliance on paper-based workflows. Before digitalization, employer contributions were manually processed through EPFO, leading to delays in crediting member accounts. This paradigm shifted with the introduction of Electronic Challan cum Return (ECR) in 2012-13, which facilitated online return submission and electronic payments. This move substantially reduced delays and allowed for real-time tracking. In a significant development, the launch of the Universal Account Number (UAN) was inaugurated by the Hon’ble Prime Minister, signifying its importance. UAN served as a unique identification number for all members and significantly enhanced transparency and service delivery. Additionally, KYC procedures were integrated, populating the UAN database with various KYC details for robust member identification. This step was pivotal in enabling e-driven services. In 2016, a committee was established to enhance processes, leading to the centralization of accounts, the establishment of the National Data Centre, and the introduction of online systems between April and December. This transformative initiative substantially reduced administrative costs and heightened transparency. The launch of ECR 2.0 in December 2016 marked another milestone, enabling multi-banking transactions that resulted in immediate electronic receipts and faster crediting of member accounts. This real-time data improved compliance and significantly reduced legal actions.

Seamless transfer of EPF accounts during job changes became possible through centralization and online processes. Members gained the ability to apply for various benefits through an online claims processing system introduced on May 1, 2017.

EPFO embraced e-governance through the UMANG platform, offering services like passbook viewing, claim filing, and status checking. An integrated online portal, E-passbook, and digital complaints system enhanced member experience.

Several improvements were implemented across different levels:

  • Impact on Employers:
    • Employees Enrolment Campaign 2017 (EEC)
    • Exemption Establishment monitoring system
  • Impact on Subscribers:
    • Facilities for International Workers
    • Aadhaar-enabled Digital Life Certificate (Jeevan Praman)
    • Self-Certification of Claims
    • Simplified Claim Form
  • Impact on EPFO Staff:
    • Cadre Restructuring in EPFO
  • E-Court Management System introduction:
    • The introduction of the E-Court Management System marked a significant advancement within the EPFO, streamlining legal proceedings and facilitating efficient resolution of payment recovery cases through digitized processes and improved case tracking mechanisms. This digital initiative aimed to expedite legal actions and enhance the overall effectiveness of the organization’s legal operations.

Moreover, the introduction of KYC involved populating the UAN database with various KYC details for reliable member identification. This was a crucial step to enable e-driven services.

In essence, these dynamic initiatives collectively led to streamlined processes, reduced delays, heightened transparency, and an enriched experience for both members and employers within the Employees’ Provident Fund Organization (EPFO).

5. Transformation of EPFO and Considerations for the Future

5. Transformation of EPFO and Considerations for the Future

EPFO has witnessed a significant transformation since 2014, transitioning from conventional processes to online systems, including mobile interfaces (EPFO sources). The introduction of the Universal Account Number and centralized accounting with online payment processing has significantly reshaped subscription management. EPFO has evolved from a bureaucratic institution into a technologically enabled, member-centric organization, streamlining processes, enhancing customer experience, and ensuring efficient compliance monitoring. As EPFO continues its digital journey, the challenge lies in addressing historical unverified subscriber accounts and exploring further initiatives for technology adoption among all employee segments, potentially through alternative channels like kiosks.

5.1 Bridging Gaps in EPFO’s Social Security Network

Despite being considered the world’s largest social security network, EPFO still faces a substantial gap in covering all eligible workers (EPFO sources). Bridging this gap requires strategic measures to extend EPFO’s reach and cultivate habitual use of its services within rural populations. To counter challenges related to benefit exploitation, EPFO must implement both preventive and corrective measures. Additionally, as digitalization reduces mundane tasks for EPFO officers, mechanisms to address resulting shifts in power dynamics and ensure their effective coping with emerging situations should be considered.

6. Future Directions and Implications for Policymakers

6. Future Directions and Implications for Policymakers

While the CSC initiative has demonstrated effectiveness in enhancing governance models, there’s still room for improvement. Recommendations for its enhancement encompass various facets:

  1. Infrastructure: Bolster physical and technological infrastructure, including robust internet connectivity and reliable power supply.
  2. Manpower: Carefully select and train personnel possessing the necessary skills and motivation to operate CSCs effectively.
  3. Skill Development & Motivation: Institute training programs aimed at enhancing the technical and soft skills of Village Level Entrepreneurs (VLEs).
  4. Financial Support and Promotion: Involve VLEs in initial financing and raise awareness among both service providers and recipients.
  5. Integration into Lifestyle: Encourage rural populations to integrate CSC services into their daily routines.
  6. Feedback Mechanism: Implement a feedback mechanism to consistently enhance CSC operations, guided by input from stakeholders.

Drawing inspiration from international best practices, the success of digital government initiatives in countries like South Korea and Singapore underscores the importance of strong leadership, effective collaboration, and integrated services.

7. Latest Advancements in E-Governance Initiatives by EPFO

7. Latest Advancements in E-Governance Initiatives by EPFO

The Employees’ Provident Fund Organization (EPFO) has taken significant strides in modernizing its operations through a series of e-governance initiatives. These initiatives are designed to leverage digital technology for more streamlined, accessible, and efficient processes. Let’s delve deeper into each of these advancements:

  1. Common Online Registration on Shram Suvidha Portal
    • EPFO has introduced a centralized online registration system through the Shram Suvidha Portal. This platform allows establishments to undergo a unified registration process, simplifying the often complex and time-consuming paperwork involved in registering with EPFO. By consolidating this process into a digital format, businesses can easily submit necessary documents and information, reducing administrative burden and expediting registration.
  2. Auto Calculation and Deposition of Interest and Damages
    • Under the EPF & MP Act, certain provisions require the calculation and deposition of interest and damages. EPFO has integrated an automated system that performs these calculations, alleviating employers from manual computations. This not only ensures accuracy but also saves time and effort, promoting compliance and reducing potential errors.
  3. Online Compliance Status Checking
    • The ‘Establishment Search Portal’ empowers employers to check their respective compliance status of any kind of registered establishment virtually. This transparency allows businesses to verify the adherence of other establishments, promoting fair practices within the ecosystem.
  4. Compliance e-Proceedings Portal
    • EPFO has introduced a dedicated portal, the Compliance e-Proceedings Portal, to manage inquiries under the EPF & MP Act. This digital platform streamlines the inquiry process, allowing all field offices to initiate and conduct inquiries online. Employers can access the portal to stay informed about their case status, upcoming hearings, and daily orders, providing greater convenience and visibility.
  5. Virtual Hearings for Dispute Resolution
    • In order to streamline the process of resolving disputes and assessing dues, EPFO has introduced virtual hearings for inquiries conducted under Sections 7A and 14B of the Act. This transition to “faceless hearings” eliminates the requirement for individuals to be physically present, offering increased convenience for both employers and employees. Utilizing secure video conferencing platforms in conjunction with the Compliance e-Proceedings Portal, these virtual hearings enhance accessibility and operational efficiency.
    • Principal Employers Functionality
  6. EPFO has introduced a valuable feature for principal employers through the Unified Portal. This functionality allows principal employers to view information related to contract employees, including EPF code numbers and UANs, facilitating verification of wage and contribution details submitted by contractors. This step empowers principal employers to ensure compliance among contractors and contract employees.
8. E-Inspections: Transforming Compliance Management

8. E-Inspections: Transforming Compliance Management

The e-inspection system revolutionizes compliance management by providing a digital interface for employers. Selected employers can access an E-Inspection Form to provide details about their establishment’s operational status, closures, unpaid dues, and proposed payment timeframes. This proactive approach not only reduces compliance costs but also encourages prompt and compliant behaviour.

a. Data Integration and Analysis

EPFO actively collaborates with various governmental departments and agencies to exchange data. By integrating information from sources such as CBSE, ESIC, State Home/Police authorities, and FSSAI, EPFO can identify gaps in coverage and enhance its outreach efforts. This data-driven approach ensures a more comprehensive and accurate understanding of establishments subject to EPFO regulations.

In essence, these e-governance initiatives exemplify EPFO’s commitment to leveraging technology for efficiency, transparency, and accessibility, ultimately benefitting both employers and employees in the realm of provident fund management.

Conclusion and Economic Impact

Conclusion and Economic Impact

The Employee Provident Fund Organisation (EPFO) is a prominent entity in India, functioning under the Ministry of Labour and Employment. Established post-independence, EPFO’s central objective is to provide social security to industrial workers and their dependents. With over 15 crore member accounts, it caters to employees in the public and private sectors, with monthly salaries up to INR 15,000. EPFO manages core schemes including the EPF Scheme (monthly savings), EPS Scheme (monthly pensions), and EDLI Scheme (insurance protection). The organization’s evolution involves embracing digitization and implementing transformative initiatives. Notable advancements include the introduction of the Universal Account Number (UAN), Electronic Challan cum Return (ECR) for online payment processing, and a streamlined online claims processing system by settling the grievances on high priority (Annexure A and B).

The expansion of internet and broadband penetration in emerging markets correlates directly with GDP growth. For India, this presents an opportunity not only for economic advancement but also for enhancing citizen-centric service delivery (World Economic Forum, 2014). By focusing on rural development, promoting entrepreneurship, and embracing technology, India can simultaneously drive growth and improve service provision through initiatives like Common Service Centres (CSCs). Enhancing CSC’s functionality, responsiveness, and user-friendliness through measures like feedback loops can further optimize its impact.

EPFO’s digital transformation extends to e-governance initiatives, such as a common online registration system, automated interest and damages calculation, virtual hearings for dispute resolution, and data integration with other governmental departments. These endeavours enhance transparency, accessibility, and efficiency for employers and employees. Challenges faced include the digital divide, infrastructure limitations, and manpower training. EPFO’s modernization drive is driven by the goal to bridge social security gaps, especially in rural areas, and to ensure more streamlined and effective provident fund management. The organization’s commitment to embracing technology and improving its services underscores its dedication to creating a more inclusive and efficient social security network.



Table A: Grievance processing from EPF subscribers through EPFiGMS

FY Received Disposed Closing Balance % of Disposal
2012-13 276824 248971 27853 89.94
2013-14 199077 194490 4587 97.69
2014-15 184480 182321 2159 98.83
2015-16 222904 221624 1280 99.43
2016-17 241193 238939 2254 99.06
2017-18 425684 422412 3272 99.23
2018-19 648312 643097 5215 99.19
2019-20 926096 905570 20526 97.78
2020-21 1338292 1323612 14680 98.91
2021-22 1545474 1519854 25620 98.34
2022-23 1423391 1382917 40474 97.16
1st April -2023 to 31st July -2023 569176 520300 48876 91.41
Source: Collected from EPFO office


Table B: Grievance Processing from EPF Subscribers through CPGrams

FY Opening balance Received Total Disposed Closing Balance % of Disposal
2017 4 16703 16707 16143 564 96.62
2018 564 19966 20530 19977 553 97.31
2019 652 30535 31187 30282 905 97.10
2020 905 37289 38194 37226 968 97.47
2021 968 80818 81786 78306 3480 95.74
2022 3480 108688 112168 109168 3000 97.33
(as on 11.08.2023)
2230 82992 85222 82245 2977 96.51
Source: Collected from EPFO office


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