Finance ministry approves 8.75% interest on PF deposits

The government has approved the Employees Provident Fund Organisation's (EPFO) decision to pay of 8.75 per cent interest on provident fund deposits for the 2013-14 financial year, thereby incentivising over 50 million subscribers of the retirement fund.

"The finance ministry has given its concurrence to the Employees' Provident Fund Organisation's (EPFO) trustees' decision to provide 8.75 per cent rate of interest to its members for the current fiscal," an official said.

The Central Board of Trustees (CBT), EPFO's apex decision making body headed by the labour minister, had, at its meeting on 13 January, decided to raise interest rate for the current fiscal to 8.75 per cent from 8.5 per cent paid in 2012-13.

The CBT's decision, however, needed the finance ministry's concurrence since it involved transfers totalling thousands of crores of rupees to the accounts of PF subscribers.

Since the finance ministry has given its concurrence to the decision, the interest would be credited into the accounts of subscribers.

EPFO estimated an income of Rs25,048.55 crore for 2013-14. As per its estimates, the payment of interest rate at 8.75 per cent would require Rs25,005.41 crore and there would be a surplus of Rs43.14 crore.

The finance ministry is reported to have asked the labour ministry to expedite the updation of EPFO's subscriber accounts till 31 March 2014 ahead of the elections.