NEW DELHI, Dec 31: The Labour Ministry has decided to notify 8.5 per cent rate of interest on Employees’ Provident Fund (EPF) accounts of over six crore subscribers of retirement fund body EPFO for 2019-20 after receiving the finance Ministry’s concurrence on that, a senior official said.
“The Labour Ministry has decided to notify the 8.5 per cent rate of interest for crediting the same into the account of over six crore subscribers of the Employees’ Provident Fund Organisation (EPFO),” the official said.
The official said that the rate of interest on the EPF has been formally approved for notification by Labour Minister Santosh Gangwar today after receiving the Finance Ministry’s concurrence.
Now the interest rate would be officially notified in the Government gazette following which the EPFO headquarter would give directions for crediting the rate of return on EPF into the subscribers accounts.
In March this year, the EPFO’s apex decision making body Central Board of Trustees headed by Gangwar had approved 8.5 per cent interest rate on EPF for 2019-20.
Earlier in September this year, the EPFO had decided to split 8.5 per cent interest into two installments of 8.15 per cent and 0.35 per cent in its trustees meet headed by Gangwar.
But later, the Ministry decided to credit the entire 8.5 per cent into subscribers’ accounts in one go.
The Labour Ministry had then (in September) explained that “in view of exceptional circumstances arising out of COVID-19, the agenda regarding interest rate was reviewed by the CBT and it recommended the same rate of 8.50 per cent to the Central Government.
“It (8.5 percent interest) would comprise 8.15 per cent from debt income and balance 0.35 per cent (capital gain) from the sale of ETFs (exchange traded funds) subject to their redemption by 31st December, 2020,” it had said.
It has planned to credit the remaining 0.35 per cent rate by December 31, after proposed liquidation of ETFs.
The EPFO had earlier planned to liquidate some of its investment in ETFs to provide 8.5 per cent interest for the last fiscal. However, it could not do so because of the choppy market conditions amid the lockdown, induced by COVID-19.
The official said that the market conditions are more than favourable these days.
Meanwhile, the Government today kept the interest rates on small savings schemes, including PPF and NSC, unchanged for the January-March quarter amid moderating bank deposit rates.
Public Provident Fund (PPF) and National Savings Certificate (NSC) will continue to carry an annual interest rate of 7.1 per cent and 6.8 per cent, respectively.
Interest rates for small savings schemes are notified by the Finance Ministry on a quarterly basis.
“The rates of interest on various small savings schemes for the fourth quarter of 2020-21 ending on March 31 shall remain unchanged from those notified for the third quarter (October 1-December 31, 2020)”, the Finance Ministry said in a notification.
Accordingly, the interest rate for the five-year Senior Citizens Savings Scheme has been retained at 7.4 per cent. The interest on the senior citizens’ scheme is paid quarterly. Interest rate on savings deposits has been retained at 4 per cent annually.
The girl child savings scheme Sukanya Samriddhi Yojana will offer 7.6 per cent rate during the third quarter of the current fiscal.
The annual interest rate on Kisan Vikas Patra (KVP) has been retained at 6.9 per cent.
Term deposits of 1-5 years will fetch an interest rate in the range of 5.5-6.7 per cent, to be paid quarterly, while the interest rate on five-year recurring deposit is pegged at 5.8 per cent. (PTI)
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