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EPFO may retain 8.65 per cent interest rate for FY 2017-18

Last year in November, it was reported that the EPFO may lower interest rate on the grounds that it is directly crediting exchange trade funds or ETF units into provident fund accounts and lower yields on other investments such as bonds.

twitter-logo BusinessToday.in        Last Updated: February 13, 2018  | 12:10 IST
EPFO may retain 8.65 per cent interest rate for FY 2017-18

Retirement fund body EPFO may not lower the interest rate on provident funds for 2017-18 in its next trustees meet on February 21. The Employees Provident Fund Organisation or EPFO is expected to keep interest rate unchanged at 8.65 per cent, PTI reported.

Last year in November, it was reported that the EPFO may lower interest rate on the grounds that it is directly crediting exchange trade funds or ETF units into provident fund accounts and lower yields on other investments such as bonds.

However, reports now suggest that the retirement fund body has sold ETF worth Rs 2,886 crore to bridge the gap to maintain 8.65 per cent for the current fiscal. The move earned a return of around 16 per cent to Rs 1,054 crore which would be sufficient to provide current interest rate this fiscal.

The EPFO had announced 8.65 per cent rate of interest on deposits for 2016-17, lower than 8.8 per cent in 2015-16.

The EPFO has been investing in ETF since August 2015 and it has so far not monetised the ETF investments. The EPFO has invested around Rs 44,000 crore in the ETFs till date. The agenda listed for the meeting of the trustees includes the proposal for rate of interest on the EPF deposits for the current fiscal.

The trustees may also review the proposal to credit the ETFs into the members' EPF account because a large number of members do not have that level of financial literacy.

(With inputs from PTI)

 

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