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EPFO To Take A Call On EPF Interest Rate For FY18 Next Month

EPFO may decide the rate of interest on provident fund deposits for this fiscal in November.



An employee holds a stack of electronic payment receipts and Indian Rupee banknotes. (Photographer: Dhiraj Singh/Bloomberg)
An employee holds a stack of electronic payment receipts and Indian Rupee banknotes. (Photographer: Dhiraj Singh/Bloomberg)

Retirement fund manager EPFO is likely to decide the rate of interest on provident fund deposits for this fiscal in its trustees meeting next month.

The Employees’ Provident Fund Organisation’s apex decision-making body, the Central Board of Trustees, headed by Labour Minister Santosh Gangwar will meet in November, a government official said on the condition of anonymity. The interest rate on provident fund deposits for 2017-18 is likely to be placed before the trustees for approval at that meeting, the official added.

In December last year, the CBT had decided to lower the rate of interest on EPF to 8.65 percent for 2016-17 from 8.8 percent provided for 2015-16.

As per the practice, the board’s decision is concurred by the finance ministry after evaluating whether the EPFO would be able to provide the rate approved by trustees through its own income.

Once the finance ministry ratifies the rate of interest approved by the CBT, it is credited into the account of EPFO members for that particular financial year.

The finance ministry had decided to lower the EPF interest rate of 8.8 percent for 2015-16 as approved by the CBT, to 8.7 percent. The decision drew flak from all quarters forcing the government to uphold the 8.8 percent rate. It has since been asking the labour ministry to rationalise the EPF interest rate in view of lowering of returns on various administered savings schemes like PPF.

The government generally ratifies the rate of return approved by the CBT because the EPFO is an autonomous body and provides interest on EPF deposits from its own income. EPFO has over 50 million subscribers.