New Delhi : The Central Board of Trustees of the Employees’ Provident Fund recommended raising the interest rate for the current financial year ending March to 8.80% from 8.75% in 2014-15, a board member said. Labour Minister Bandaru Dattatreya announced the new rates in Chennai, despite protests from labour unions, which demanded a higher interest rate of 8.95% for the year, the member said.

The new interest rate will now have to be approved by the finance ministry. It remains to be seen whether the ministry will approve the recommendation, given interest rates for both the Public Provident Fund and the General Provident Fund are lower at 8.7% in 2015-16.

The recommendations for higher interest come on a day when the finance ministry announced it will cut interest rates on some small saving schemes with effect from Apr 1 to help transmission of rate cuts by the Reserve Bank of India.

The Finance Audit and Investment Committee of the EPF had recommended an interest rate of 8.95% for 2015-16. Labour unions have argued that EPF is in a position to pay a higher interest rate, given the fund’s income.  According to unions, the EPF will have a surplus of about 910 mln rupees in 2015-16 even after paying 8.95% interest.

At the proposed rate of 8.80%, the EPF will have a surplus of about 6 bln rupees, the board member said.                      -Cogencis

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