The union finance ministry has approved 8.65 percent rate of interest on Employees' Provident Fund (EPF) for 2018-19 as decided by retirement fund body EPFO, benefitting more than 6 crore formal sector workers.

"The Department of Financial Services (DFS), a wing of Finance Ministry, has given its concurrence to Employees Provident Fund Organisation's (EPFO) decision to provide 8.65 percent rate of interest for 2018-19 to its subscribers," a source privy to the development told PTI.

"The DFS has approved the proposal subject to fulfilment of certain conditions related to the efficient management of the retirement fund," the source said further.

Earlier in February, the EPFO's apex decision making body Central Board of Trustees headed by labour minister Santosh Gangwar had decided to raise the interest rate on EPF to 8.65 percent for 2018-19, which was the first increase in the last three years.

The interest rate on EPF was hiked to 8.65 percent for the last fiscal from 8.55 percent provided in 2017-18. The EPFO had earlier reduced the interest rate in 2016-17 to 8.65 percent from 8.8 percent in 2015-16.

After the finance ministry concurrence, the Income Tax Department and the labour ministry would notify the rate of interest for 2018-19. Thereafter the EPFO would give directions to its over 120 field offices to credit the rate of interest into subscribers' account and settle their claims accordingly.

According to the EPFO estimates, there would be a surplus of Rs 151.67 crore after providing 8.65 percent rate of interest for 2018-19 on EPF. There would have been a deficit of Rs 158 crore on providing 8.7 percent rate of interest in EPF for last fiscal.

That is why the body decided to provide 8.65 percent rate of interest for 2018-19. The EPFO had provided a five-year low-interest rate of 8.55 percent to its subscribers for 2017-18.