EPFO likely to pay interest before Diwali, finance ministry’s nod awaited

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The salaried class stressed over job losses since the outbreak of the Covid-19 pandemic early last year is likely to breathe a sigh of relief as the Employees’ Provident Fund Organisation is likely to credit the interest rate for Financial Year 2020-2021. The EPFO’s move could bring cheer for the salaried class ahead of the festive season and specifically for those who are struggling with job losses and pay cuts.

The EPFO is expected to credit the interest rate for FY21 ahead of Diwali, the Mint reported. This will coincide with government employees and pensioners getting their dearness allowance and dearness relief hike, the report added quoting anonymous government officials.

8.5% interest rate

The retirement fund manager is likely to soon get a go-ahead with the interest rates from the Finance Ministry, the report mentioned. The EPFO’s central board has already approved the interest rate, according to the officials quoted by the report.

EPFO’s board has sought approval of the Finance Ministry for 8.5% interest for FY21. The board has reached this decision taking all factors into account and is well placed to pay the decided interest rate, the report added quoting one of the officials.

However, it is necessary for the EPFO to get the approval of the Finance Ministry on the interest rate and considering the board’s decision as well as a comfortable financial position, a green signal from the ministry is expected soon.

The EPFO board recommended an 8.5% payout for FY21 in March this year. The retirement fund manager recorded around Rs 70,300 crore income in the previous fiscal. This also included Rs 4,000 crore from selling a portion of equity investment. As the equity market has grown well since the last board meeting ‘the stock exposure of the EPFO has led to good earnings’, said one of the officials as quoted by the report.

The income of the EPFO has gone up due to higher return from debt and equity investments which has made it possible for it to go ahead with the decided interest rate, according to the board.