NE BUSINESS BUREAU
NEW DELHI, FEB 10
The 235th meeting of the Central Board of Trustees (CBT) of the Employees’ Provident Fund Organisation (EPFO) has recommended 8.25% interest rate on Employees’ Provident Fund (EPF) deposits for the financial year 2023-24.
- The Board has recommended a distribution of historic income amount of Rs 1,07,000 crores to EPF members’ accounts on a total principal amount of about Rs 13 lakh crores
- The interest rate offered by EPFO tends to be higher compared to other comparable investment avenues available to subscribers
Union Labour Minister Bhupendra Yadav made the announcement on Saturday, February 10, emphasising that this decision aligns with Prime Minister Narendra Modi’s commitment to fortify social security for the country’s labor force.
CBT Vice-Chairman Rameshwar Teli, Union Minister of State for Labour & Employment, Petroleum & Natural Gas and Co-Vice-Chairpersons Arti Ahuja, Secretary Labour & Employment and the Member Secretary Neelam Shami Rao, Central P F Commissioner were also present during the meeting.
The Board has recommended a distribution of historic income amount of Rs 1,07,000 crores to EPF members’ accounts on a total principal amount of about Rs 13 lakh crores, which was Rs 91,151.66 crores and Rs. 11.02 lakh crores in the financial year 2022-23, respectively. The total income recommended for distribution is the highest on record.
Comparing to the previous financial year, there has been significant growth. The income has grown by more than 17.39%, while the principal amount has increased by 17.97%. This suggests a healthy financial performance and potentially strong returns for the members.
If approved, this proposed interest rate will mark the highest in the last three years, providing a welcome relief to EPF subscribers.
The previous record interest rate was set at 8.5% in the fiscal year 2019-20, and it remained constant in 2020-21.
However, in 2021-22, the CBT reduced the interest rate to 8.1%, reaching the lowest level in four decades.
A marginal increase to 8.15% was subsequently implemented in the financial year 2022-23.
The interest rate recommendation will undergo official approval from the Ministry of Finance and, upon confirmation, will be officially published in the government gazette.
Following this approval, the EPFO will proceed to credit the designated interest rate directly into the accounts of its subscribers.
EPF contribution is credited to the account on a monthly basis, and interest is computed every month. However, the total interest for the year is credited at the end of the financial year.
Going by the rule, the interest here is calculated by adding the monthly running balance, multiplying it by the interest rate, and dividing it by 1,200. The EPFO calculates the month-wise closing balance and then the interest for the whole year.
EPFO has a strong track record of distributing higher income to its members over the years with prudence. The interest rate offered by EPFO tends to be higher compared to other comparable investment avenues available to subscribers. This indicates confidence in the credit profile of EPFO’s investments, as well as its ability to provide attractive returns to its members.
