EPFO to pay 8.8% interest on 'inoperative' PF accounts: report

The government will soon issue a notification authorising the retirement fund body Employees Provident Funds Organisation (EPFO) to pay 8.8 per cent interest on "inoperative" accounts as well, reports quoting union minister of labour Bandaru Dattatreya said.

There are about Rs42,000 crore lying in ''inoperative accounts'' of the EPFO across the country, according to labour ministry officials.

"The inoperative (EPF) accounts are not being paid interest since 2011. As per the instructions given by Prime Minister Narendra Modi and finance minister Arun Jaitley, we decided to start paying interest to those accounts to make them operative," Dattatreya said.

"I have already signed the file concerned. Notification will be issued soon. We will pay 8.8 per cent interest on those accounts. About 97 million workers or employees will benefit from this notification. This is a Diwali gift for the people. We will issue notification within a week," PTI quoted the minister as saying.

"People can park their funds in EPF as long they want. Since the inoperative accounts are getting interest, people may not like to withdraw. It is a safe investment also. If not today, tomorrow we will have to pay to the claimant. So there is nothing called unclaimed," a senior official of the ministry had earlier said.

In case of EPF, if there is no contribution paid during the last 36 months, then that account is classified as "inoperative", the official added.

"We are in the process of identifying multiple accounts held by individuals. Once that is completed we will start distributing the interest to those accounts," Dattatreya said.