New Delhi:The Central Government may soon issue a notification to pay 8.65 percent interest on the Employees Provident Fund (EPF) for the financial year 2018-19 . The Employees Provident Fund Organization (EPFO) had proposed to pay 8.65 per cent interest but there was a disagreement between the Ministry of Labor and the Ministry of Finance regarding this rate, which has now been resolved.
Two people involved in the matter said that Labor Minister Santosh Kumar Gangwar recently met Finance Minister Nirmala Sitharaman and told him that 4.6 crore members had to pay 8.65 per cent interest for the financial year 2018-19. Even after that, the organization will have sufficient balance.
A senior official involved in the meeting of the Central Board of Trustees held in Hyderabad on 21 August said on the condition of anonymity that the rate of interest would be notified within a week. Though the official said that the interest rate issue was not included in the agenda but it was discussed unofficially.
The rate of interest on EPF is determined by the Central Board of Trustees, after being approved by the Ministry of Finance, it is notified by the Ministry of Labor. At the CBT meeting on 19 February, the trustees had decided to pay 8.65 per cent interest for the financial year 2018-19 but the Finance Ministry wanted the EPFO to cut this interest rate by at least 10 basis points. . The government has not been able to notify the interest rate due to the objection of the Ministry of Finance. Due to the delay in this, there has been a delay of 5 months this time in depositing interest in the accounts of the members.
8.55 percent interest was paid on EPF in the financial year 2017-18. In June, the Finance Ministry wrote a letter to the Ministry of Labor asking it to reconsider the 8.65 percent interest rate. The Finance Ministry gave two rationale behind this, first the EPFO has invested in troubled IL&FS Group companies and the second is to avoid fewer surpluses as compared to the previous year. However, the Ministry of Finance had termed these arguments of the Finance Ministry as baseless. According to the media report, even after paying interest at the rate of 8.65 percent in the financial year 2018-19, the EPFO will have surplus balance of Rs 3,150 crore.