Retirement fund body EPFO is likely to retain 8.65 per cent interest rate on provident fund deposits for its about 5 crore members for 2017-18 at its trustees' meet today, sources said.
In order to maintain the 8.65 per cent interest this fiscal, the Employees Provident Fund Organisation (EPFO) had sold a portion of its investments in the exchange traded funds (ETF) worth Rs 2,886 crore earlier this month, the sources said.
The EPFO had announced this rate on deposits for 2016-17, a tad lower than 8.8 per cent in 2015-16. It has earned a return of Rs 1,054 crore on sale of ETFs this month, which would be sufficient to provide 8.65 per cent rate of interest this fiscal, said the sources.
The EPFO has been investing in ETFs since August 2015 and it has so far not monetised the ETF investments. The EPFO has invested around Rs 44,000 crore in the ETFs till date.
According the latest evaluation of the EPFO's investments in ETFs, it has earned a return of 16 per cent. However, this return is notional because it could not be realised unless the EPFO liquidates these ETF investments.