New Delhi, March 21 (FN Bureau) Even as interest rate on employees provident fund (EPF) has been proposed to be reduced to 8.1 per cent for FY22, Finance Minister Nirmala Sitharaman on Monday stated that the rate is still higher compared to schemes like Sukanya Samridhi Yojana, Senior Citizen Savings Scheme and Public Provident Fund. “I just want to place it before the hon’ble sir, you and also to have it put on the record of the Rajya Sabha. Sukanya Samridhi Yojana is at 7.6 per cent, Senior Citizen Savings scheme is at 7.4 per cent, PPF is at 7.1 per cent,” the Minister said while replying to the discussion on Appropriation Bill in the Rajya Sabha.
She, however, recognised the concerns raised by some opposition members over the reduction of interest rate on retirement savings. The Minister noted that State Bank of India’s highest rate for portfolios like 5 to 10 year fixed deposits is at 5.50 per cent and it has a mark-up for senior citizens which takes it to 6.3 per cent. “Government’s own borrowing (G-Secs) on an average across various tenures is at 6.28 per cent, i.e. if the government goes to borrow from certain funds it has to pay that kind of a rate,” she further said defending the reduction in interest rate for EPF. “These are today’s realities which do keep us in the context of decisions which have been taken by a central board of EPFO. It is yet to come to Finance Ministry for approval but the fact remains that these are the rates which are prevailing today and it is still higher than the rest,” Sitharaman said.
The Finance Minister emphasised that the Central Board of EPFO has members from various stakeholders including workers. The Central Board of Employees’ Provident Fund Organisation (EPFO) in its meeting on March 12 had recommended 8.10 per cent annual rate of interest to be credited on EPF accumulations in members’ accounts for the financial year 2021-22. The interest rate would be officially notified in the government gazette following which EPFO would credit the rate of interest into its subscribers’ accounts. The reduced interest rate of 8.1 per cent on employees’ retirement savings is almost four-decade low.