Employees Provident Fund Organisation (EPFO) decided to lower the interest on EPF deposits for the current fiscal year to 8.65 percent from the current 8.8 percent.

The new move will impact over four crore employees in the country who contribute a part of their salary towards the provident fund every month.

A salaried individual contributes 12 percent of his/her salary to the EPF account every month. A part of the employer's contribution goes to into Employee Pension Scheme.

The decision to reduce the interest rate by 0.15 per cent was taken by EPFO's apex decision-making body, the Central Board of Trustees (CBT), headed by the Labour Minister

The lower interest rate PF deposits come in the light of a general decline in interest rate across different financial savings instruments, including bank fixed deposits and small savings schemes, followed by the demonetization of old Rs 500 and Rs 1000 notes.

In September during this year, the government reduced interest rates on small savings schemes marginally by 0.1 per cent for the October-December quarter of 2016-17. This resulted in lower returns on PPF, Kisan Vikas Patra, Sukanya Samriddhi Account, among others.

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