Finance Minister Nirmala Sitharaman on Monday said EPFO interest rate is still better than other small saving instruments, defending a recent proposal to cut interest rate paid on employees' provident fund deposits to over four-decade low of 8.1 per cent.
Replying to a debate in the Rajya Sabha, she said the decision to lower interest rate was taken by the central board of the provident fund managing body, EPFO, which has representatives of all stakeholders including employees' unions.
“EPFO has a central board which is the one which takes the call on what rate has to be given for them, and they have not changed it for quite some time...they have changed it now ... to 8.1 per cent," she said, adding that the proposal is yet to come to the finance ministry for approval.
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The central board has proposed to slash the PF rate to 8.1 per cent for FY22 from 8.5 per cent in FY21 and FY20, the lowest in four decades.
“The fact remains these are rates which are prevailing today, and it (EPFO interest rate) is still higher than the rest,” she said.
Sitharaman cited the comparative prevailing interest rates of other schemes saying Sukanya Samriddhi Yojana offers 7.6 per cent, Senior Citizen saving scheme (7.4 per cent) and PPF (7.1 per cent), while SBI's 5-10 year fixed deposits attract 5.50 per cent interest rates.
