New Delhi: The central government on Monday officially approved the 8.15 percent interest rate on deposits made under the Employees' Provident Fund Organisation (EPFO) scheme for the financial year 2022-23. The announcement of hike in the interest rate was initially announced by the EPFO on March 28 this year, thus, benefiting over six crore subscribers.
“The Ministry of Labour and Employment, Government of India, has conveyed the approval of the Central Government under para 60(1) of Employees’ Provident Fund Scheme, 1952 to credit interest @ 8.15% for the year 2022-23 to the account of each member of the EPF Scheme as per the provisions under Para 60 of EPF Scheme, 1952,” the EPFO circular said.
The EPFO had decreased the interest rate in March 2022 on EPF deposits for the financial year 2021-22 to a four-decade low of 8.10 percent, down from 8.5 percent in 2020-21. This marked the lowest interest rate since 1977-78 when the EPF interest rate was recorded at 8 percent.
EPFO has hiked the interest rate despite registering a deficit of around Rs 197 crore in 2021-22 against an estimated surplus of Rs 350-400 crore for 2021-22 when an 8.1 percent interest rate was recommended for the year in March 2022.
It is important to mention here that 8.1 percent rate for 2021-22, ratified by the Finance Ministry in June 2022, was the lowest in four decades and the ministry has been nudging EPFO to reduce interest rates to a sub-8 percent level.
As part of the standard procedure, the Labour Ministry forwards the interest rate recommendations to the Finance Ministry for formal ratification. The EPFO has issued instructions to its filed offices, requesting them to credit the interest at the increased interest rate on EPF for the financial year 2022-23 into the accounts of its members (aka EPF subscribers) for the financial year 2022-23.
The directive was issued after the finance ministry’s agreement with the EPFO trustees’ approved rate of interest earlier in March this year.
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