Employees Provident Fund Organisation (EPFO) on Monday fixed the rate of interest on EPF deposits for current fiscal at 8.65 per cent. The retirement fund body has more than 4 crore subscribers.
The Finance Ministry had earlier this year announced its decision to lower interest on provident fund deposits for 2015-16.
The rates were lowered to 8.7 per cent from the 8.8 per cent approved by the Central Board of Trustees (CBT), which is the apex decision-making body of EPFO and is headed by the Labour Minister.
The government however later withdrew the decision following protests by trade unions. It then approved 8.8 per cent rate of interest on provident fund deposits for 2015-16.
“The Employees Provident Fund Organisation’s apex decision making body, the Central Board of Trustees (CBT), has taken a decision to lower the interest rate to 8.65 per cent for the current fiscal from 8.8 in 2015-16,” Indian National Trade Union Congress Vice-President Ashok Singh told PTI after the meeting at Bengaluru.
Bharatiya Mazdoor Sangh General Secretary Virjesh Upadhyay also said that 8.65 per cent rate of interest is fixed on EPF deposits for 2016-17.
As per the EPFO income projections, retaining 8.8 per cent rate of interest for the current fiscal would have left a deficit of Rs 383 crore.
However, the body could have utilised about Rs 409 crore surplus with it, which accrued after providing 8.8 per cent rate of interest for 2015-16, to retain the same rate of return for the current fiscal.
A surplus of about Rs 69.34 crore was stipulated if interest rate was to be lowered to 8.7 per cent. EPFO has projected income of Rs 39,084 crore for the current fiscal.
As per sources, the Finance Ministry has been asking the Labour Ministry to align the EPF interest rate with other small saving schemes of the government like Public Provident Fund (PPF).
In September, the government reduced interest rates on small savings schemes marginally by 0.1 per cent for the October-December quarter of 2016-17, which resulted in lower returns on PPF, Kisan Vikas Patra, Sukanya Samriddhi Account, among others.
The Labour Ministry however wanted to retain 8.8 per cent for the current fiscal as well, a source said.
(With inputs from PTI)