According to recent news that has been going around, the EPFO is likely to increase the PF interest rate to 8.95%. The current existing PF interest rate is 8.75%, which was applicable for previous fiscal year.
If this proposal comes through, then it will be the highest interest rate since 2010-11 ( it was 9.5% that financial year).
Now, before the Finance ministry notifies the proposal, it has to be endorsed by the central board of trustees.
This proposal has been announced in such a time where the government and the Reserve Bank of India are trying ways to reduce deposit rates. This is been tried so that the banks can lessen the lending rates and spur investment.
It is also possible that a higher PF interest rate coupled with a reduction in bank rates might bring in new funds as small saving schemes or as a voluntary contribution.
This new proposal might find resistance from the Finance ministry. But according to the EPFO, there is enough resource to fund this increased PF interest rate. Also considering reasons such as huge dependencies on savings and the fact the EPF fund acts as an important savings avenue for the majority of the citizens, the proposal does not seem likely to be blocked.
Considering that the department will approve this proposal soon enough, we will keep you updated with changes.