EPFO to take a call on EPF interest rate for FY18 next month

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 apex decision-making body of Employees' Provident Fund Organisation (EPFO), Central Board of Trustees headed by Labour Minister Santosh Gangwar will meet in November," an official source said.

EPFO has over 50 million subscribers.

The source further said, "The interest rate on provident fund deposits for 2017-18 is likely to be placed before the trustees for approval."

In December last year, the CBT had decided to lower the rate of interest on EPF to 8.65 per cent for 2016-17 from 8.8 per cent 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 or not.

Once the Finance Ministry ratifies the rate of interest approved by the CBT, it is credited to the account of EPFO members for that particular financial year.

The Finance Ministry had decided to lower the EPF interest rate of 8.8 per cent for 2015-16 as approved by the CBT, to 8.7 per cent. The decision drew flak from all quarters forcing the government to uphold 8.8 per cent.

The Finance Ministry has 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.