Media reported today based on labour ministry sources on Saturday, March 12th that the Employee Provident Fund interest rate will be slashed from 8.5% to 8.1%, the lowest rate since 1977-78. The decision was finalized in Guwahati during a meeting of the EPFO’s central board of trustees chaired by Labour and Employment Minister Bhupender Yadav, and will be recommended to the Finance Ministry soon.
The EPF interest rate had seen a similar cut for the year 2019-20 in March 2020 when it was lowered from 8.65% to 8.5%, marking a seven-year low since 2012-13.
The EPFO had come under pressure during the pandemic in 2020 when it had to settle 56.79 lakh claims worth ₹ 14,310.21 crore under the advance facility. Despite the interest rate cut, the EPF provides the highest interest rate among all savings options.
The EPFO is the second-largest non-banking financial institution in the country with a corpus of over ₹16 lakh crore. The announcement of interest rate cut comes amid rising inflation in the country, which has been on an upward trend since 2018 when it was 3.43%, and reached a peak of 6.81% in 2020.
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