New Delhi, March 5: The Employee Provident Funds Organisation (EPFO) Central Board, which met on Thursday to fix the new interest rate, decided to lower the same. The employees would be provided an interest of 8.5 percent on their savings under PF for the financial year 2019-20. The rate is lower as compared to 8.65 percent in FY 2018-19. The austere decision comes in wake of the economic slowdown prevalent in the nation.

"Central Board of Trustees have decided to decrease the rate of employees provident fund to 8.5 percent for 2019-2020. Earlier it was 8.65 percent," announced Union Labour Minister Santosh Gangwar, who attend the key meeting held in the national capital earlier today.

Update by ANI

A registered company in India, in the organised sector, is duty-bound to deposit 12 percent of its employee's annual pay in his EPFO account. The provident funds are aimed at securing the future of the employee. The amount, on which the government provides an annual interest, could be withdrawn after retirement or when the account holder is unemployed.

The new interest rate on provident fund is lowest since 2013-14. In the  last seven years, the government has fluctuated the rates between 8.55 to 8.75 percent. The last time when the PF rate was lowered to 8.5 percent was 2012-13, when the economy was facing "frictions" and the country was placed by international agencies under the "fragile five" category.

The decision to lower provident fund rate also comes amid widening fiscal deficit. Analysts had claimed that the EPFO may reduce the interest rate in bid to lower the expenditure. Notably, the provident fund body has over 60 million subscribers, with the total number of account holders constantly increasing.

(The above story first appeared on LatestLY on Mar 05, 2020 01:21 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).