It seems that this coming New Year has brought yet another good news with it. The entire news channel is flooded with the news of lowering of the interest rate on Employees Provident Fund. The news came out on Monday, after a meeting held in Bengaluru. Let us check out this news in further details:
Several Discussions Involved And Finally The Decision Was Made:
It was decided on Monday that the interest rate on EPF deposits will be lowered. The decision is made by the Retirement fund body EPFO. The interest rate for the current fiscal will be reduced from 8.8% to just 8.65% for the year 2016-17. This rate is applicable for over four crore subscribers. The General Secretary of Bharatiya Mazdoor Sangh ,Mr. Virjesh Upadhyay has confirmed this news. Several other officials as well, have confirmed this news.
If we go through the EPFO income projections, we can see that this lowering of interest rate can help in the saving of Rs. 383 crore. Also, according to experts, this rate reduction is definitely a setback for an approximate 40 million employees, yet it is a very attractive scheme in comparison to the interest rate on FDs.
What Is EPFO?
EPFO is a body that is involved in the distribution of interest rate, as per the income generated from its investment every year. And also, it takes no money from the government. There has beeen several variations in the interest rate on EPFs, since long time. While it was 9.5% in the year 2010-11, it was just 8.5% in 2012-13. The interest rate was once again increased to 8.75% in the year 2013-14, and kept constant in 2014-15.
Officials who attended the meeting say that this decision is not at all affected by the surplus left from the previous year. According to the sources, the Finance ministry has asked the Labor Ministry about the alignment of the EPF interest rate with the other small saving schemes implemented by the government. It is also said that the Labor Ministry, however, wanted to retain the 8.8% interest rate for the current fiscal as well.
Well, we can clearly see that this move is further in line, with the falling rate regime. This regime is also seen previously, where RBI has cut key lending rates and also the banks has reduced the deposit rates. All of this, is the result of demonetization. Let us see what more is still to come up with this demonetization scheme. Stay tuned and we will keep on updating you about the various other outcomes coming up in this New Year.