The Employee Provident Fund interest rate has been lowered to 8.5 per cent. (Photo: Reuters/Representational image)

The Employee Provident Fund interest rate has been lowered by 0.15 per cent for the year 2019-20 to 8.5 per cent from the earlier 8.65 per cent.

With the fresh development, salaried employees will get 0.15 per cent lower interest rate on their provident fund deposits. The fresh rate announced by Union Labour Minister Santosh Gangwar comes on the back of lower yields on such investments.

Lowered rates could be a direct result of the economic slowdown, reported The Economic Times, adding that EPFO's earnings on debt market instruments including government securities and fixed deposits have been negatively impacted.

"The EPFO has decided to provide 8.5 per cent interest rate on EPF deposits for 2019-20 in the Central Board of Trustees (CBT) meeting today," Gangwar told reporters after the meeting here.

Now, the labour ministry requires the finance ministry's concurrence on the matter. Since the Government of India is the guarantor, the finance ministry has to vet the proposal for EPF interest rate to avoid any liability on account of shortfall in the EPFO income for a fiscal.

The finance ministry has been nudging the labour ministry for aligning the EPF interest rate with other small saving schemes run by the government like the public provident fund and post office saving schemes.

The EPFO had provided 8.65 per cent rate of interest to its subscribers for 2016-17 and 8.55 per cent in 2017-18. The rate of interest was slightly higher at 8.8 per cent in 2015-16.

It had given 8.75 per cent rate of interest in 2013-14 as well as 2014-15, higher than 8.5 per cent for 2012-13.

(With inputs from PTI)