4 July : Over 4.5 crore subscribers will get 8.5 per cent return for 2009-10 on their provident fund deposits at a time when banks are lowering the deposit rates across the board.Two days before the budget, the Employees’ Provident Fund Organisation (EPFO) decided to retain the interest rate at 8.5 per cent for the fifth consecutive year.
The decision to retain the interest rate was taken by EPFO’s policy-making body, Central Board of Trustees (CBT) which was chaired by Labour Minister M Mallikarjun Kharge.The decision will now go to the Finance Ministry for ratification.
The payment of 8.5 per cent interest rate on provident fund deposits, which are of the order of Rs 1.82 lakh crore, is expected to leave a surplus of Rs 6.4 crore during the current fiscal.The EPFO has decided to retain the interest rate even as the interest being paid by the banks has been coming down in the recent past.
The country’s largest bank SBI recently decided to cut deposit rates by 25 to 50 basis points in May, while several others followed suit.The decision to pay 8.5 per cent interest rate was on expected lines as payment of a higher amount would result in a deficit in the EPFO’s account.
For, sources said, the EPFO has no reserves left to pay a higher interest rate than 8.5 per cent this fiscal as it had suffered a Rs 139-crore deficit during 2008-09 for maintaining the same rate of interest on deposits.