Economy

EPFO, labour ministry may retain 8.65% interest rate for FY19, says report

Updated : July 01, 2019 10:52 AM IST

The Employees Provident Fund Organisation (EPFO) and the Union labour ministry will retail the interest rate of 8.65 percent despite the finance ministry's concern that the rate is too high, Mint reported, citing people aware of the development. The EPFO and the ministry will communicate the decision to "higher ups," added the report.

On February 21, the EPFO had set the interest rates at 8.65 percent, 10 basis points higher than 8.55 percent the previous year. One basis point is one-hundredth of a percentage point.

The ministry believes that the higher interest rate will not justify the fund's performance but two officials with knowledge of the discussions told Reuters that the bigger factor is concerned with the high return that would hurt the economy by reducing banks' ability to lend at attractive rates.

“EPFO’s central board of trustees is a tripartite body, and has representation from the finance ministry as well. When the decision was taken, it was unanimous. Four months after a decision was taken, you cannot go back. The message for the working class as well as the political bosses will be far-reaching," a government official, the first of the three people cited above told Mint.

The labour ministry believes that since the government does not provide subsidy on the EPF rate and that the payout is based on the EPFO's investment returns, there is 'no logic to penalise the working class,' a second official told Mint.

EPFO, labour ministry may retain 8.65% interest rate for FY19, says report

You May Also Like

Market cap: Six of top-10 most valued firms add over Rs 1.13 lakh crore

COVID-19 vaccination drive: 1.9 lakh people vaccinated on Day 1

Coronavirus news highlights: Over 1.6 lakh people vaccinated today: Health ministry

Trending on CNBC-TV18

recommended for you