The policy making body of the Employees Provident Fund Organisation the Central Board of Trustees will meet on Saturday to decide the interest rate on provident fund for 2009-10. The interest rate for PF for around 4.5 crore subscribers is likely to be retained at 8.5 per cent for the current fiscal.
The labour ministry had earlier indicated that the organisation will be able to give an 8.5 per cent rate of interest for the current fiscal without having to dip into any reserves. However,the CBTs decision will be put up before the finance ministry for a final stamp of approval.
At 8.5 per cent interest rate,the EPFO will manage a surplus of Rs 6.4 crore. The organisation stands to suffer deficit of Rs 739.94 crore and Rs 366.77 crore if it decides on a higher rate of interest of 9 per cent and 8.75 per cent respectively. Last year,the organisation had suffered a Rs 139-crore deficit for retaining 8.5 per cent rate of interest on deposits.
To bridge the deficit,the EPFO had to make use of its contingency fund of around Rs 150 crore. There are no reserves which could be used as alternative option for additional funds for giving higher rate of interest than 8.5 per cent this fiscal, said an agenda note for Saturdays CBT meeting,which is to be chaired by labour minister M Mallikarjun Kharge.
Meanwhile,the CBT may deliberate on the issue of investing 15 per cent of EPFOs corpus of about Rs 1.82 lakh crore in the stock markets as suggested by the finance ministry in August last year. However,this has been a contentious issue,with trade unions having expressed their opposition to equity-linked investments each time,stating the volatile nature of markets.
The finance ministry in August last year had suggested an investment pattern to EPFO under which the organisation could park up to 15 per cent of its funds in the companies listed on the Bombay Stock Exchange and the National Stock Exchange and also equity-linked schemes of Sebi-regulated mutual funds.
However,the proposal was rejected by the finance and investment committee of EPFO at its meeting on March 26 this year. The recommendations of the finance and investment committee are usually accepted by CBT,which has the final authority.