EPFO decides 8.5pc interest rate on provident fund for 2009-10

New Delhi, July 4 (PTI) 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, India's 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. PTI