The Employees’ Provident Fund Organisation (EPFO) is learnt to have got clearance from the Finance Ministry for interest rate recommendation of 8.5 per cent for FY20 and is expected to credit it to subscribers in next few days. The retirement fund body is looking at crediting the interest rate in one go of 8.5 per cent instead of a split of 8.15 per cent and 0.35 per cent proposed earlier, a senior official said.
“Officials of both labour and finance ministries held meetings this week regarding the interest rate proposal. The Finance Ministry has raised some concerns regarding the risky investments, for which it has sought more details, but has given its nod for the interest rate proposal,” the official said, adding that it should be credited in a few days. Queries sent by The Indian Express to the Finance Ministry went unanswered.
The Central Board of Trustees of the EPFO had in September recommended splitting payment of the interest rate of 8.5 per cent recommended for financial year 2019-20 into two parts, citing “exceptional circumstances arising out of Covid-19”.
The EPFO had then said it will credit 8.15 per cent to its over six crore subscribers for the year immediately and give the remaining 0.35 per cent, which is linked to its equity investments, “before December 31”. This, it had said, was subject to redemption of its units invested in exchange-traded funds or ETFs.
The Finance Ministry had questioned the 2018-2019 interest rate of 8.65 per cent as well, besides the EPFO’s exposure to IL&FS and similar risky entities. It has been nudging the EPFO to reduce the rate to sub-8 per cent level in line with the overall interest rate scenario. Small savings rates range from 4.0-7.6 per cent.
📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines