The finance ministry has said that the interest amount is being credited into the accounts of employees’ provident fund (EPF) subscribers, and in case it is not visible in the statements, it is because the EPFO software is being upgraded. The ministry said that there is no loss of interest amount for any subscriber.
“There is no loss of interest for any subscriber. The interest is being credited in the accounts of all EPF subscribers. However, that is not visible in the statements in view of a software upgrade being implemented by EPFO to account for change in the tax incidence,” the finance ministry said in a quote tweet.
The tweet was in response to a tweet by Mohandas Pai, chairman of Aarin Capital and ex-Infosys director. “Dear EPFO, where is my interest? @PMOIndia @narendramodi Sir need reforms! Why should citizens suffer because of bureaucratic inefficiency? Pl help,” Pai tweeted tagging a Moneycontrol article on the EPFO interest issue.
The finance ministry also said, “For all outgoing subscribers seeking settlement and for subscribers seeking withdrawal, the payments are being done inclusive of the interest.”
In another tweet, Pai said, “How is payment done to a subscriber retiring in May if interest is not credited for March end? Paid later?”
In June, the government approved a four-decade-low interest rate of 8.1 per cent on employee provident fund (EPF) deposits for 2021-22. The 8.1 per cent EPF interest rate is the lowest since 1977-78, when it stood at 8 per cent. The EPFO has over 65 million members and it managed assets worth Rs 15.7 lakh crore last year.
The 8.5 per cent interest rate on EPF deposits for 2020-21 was decided by the Central Board of Trustees (CBT) in March 2021. The CBT is a tripartite body of the EPFO involving government, workers and employers’ representatives and the decision of CBT is binding on EPFO. It is headed by the labour minister.
It was ratified by the finance ministry in October 2021. Thereafter, the EPFO issued directions to field offices to credit the interest income at 8.5 per cent for 2020-21 into the subscribers’ account.
After over two years of remaining unchanged, the government last week revised upwards the interest rates on small savings schemes, including Kisan Vikas Patra (KVP) and time deposits, up to 30 basis points for October-December 2022. The move comes even as the Reserve Bank of India (RBI) has been raising the repo rate for the past few months, thus pushing up interest rates on various deposits and loans in the country.
Last week, the RBI increased the repo rate by 50 basis points to 5.9 per cent, the fourth-time increase in a row. In the past four subsequent monetary policy reviews since May this year, the RBI’s rate-setting panel has raised 190 basis points in total. The repo rate is the interest rate at which the RBI lends to the commercial bank.
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