At a time when bank fixed deposit rates are falling, your provident fund money could fetch more. The finance panel of retirement fund body Employee Provident Fund Organisation (EPFO) has recommended a higher interest rate of 8.95 per cent for the current fiscal (2015-16), a Times of India report said.
If the finance panel's recommendations are accepted by the EPFO's apex decision making body - Central Board of Trustees - this would be the highest interest rate offered on provident fund deposits since 2010-11, when it offered 9.5 per cent. Since 2013-14, the interest rate on provident has remained unchanged at 8.75 per cent.
EPFO has over six crore subscribers and manages a huge corpus of over Rs 6.5 lakh crore with an incremental annual deposits of Rs 1 lakh crore.
The proposal for higher interest rate on provident fund comes in the wake of the finance ministry saying that it could lower the interest rate on several small saving schemes. With small saving deposits like Public Provident Fund and Sukanya Samriddhi Scheme commanding a rate of 8.7-9.3 per cent, banks have been reluctant to transmit the entire policy rate reduction by the Reserve Bank to borrowers.
However, fixing the interest on provident fund solely depends on the EPFO's apex decision making body Central Board of Trustees, headed by Labour Minister Bandaru Dattatreya, as the body provides interest from its own income.