The government on Wednesday said that it has increased the interest rate offered in the employees’ provident fund by 1 percentage point to 9.5 per cent for the financial year 2010-11.
The move will benefit nearly 4.71 crore employees in public and private sectors.
Announcing the hike, Union labour minister Mallikarjun Kharge, said, “We have decided to give 9.5 per cent rate of interest to subscribers during the current financial year on their contributions. For over four crore subscribers this is a big gift from EPFO Trustees.”
With this hike in interest rate, EPFO deposits become more attractive than bank fixed deposits, which at present are offering interest in the range of 7-7.5 per cent.
The decision would put an additional burden of Rs 1,600 crore on the EPFO, the minister said, adding that it would be met from the surplus of over Rs 1,731 crore in the interest suspense account.
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