New Delhi: A fresh meeting of Employees Provident Fund (EPF) Board has been convened on March 10 to thrash out the vexed issue of interest rate for the current fiscal.
At its last meeting, the Central Board of Trustees of the EPF had rejected Finance Ministry's proposal to invest 5 per cent of the EPF money in the equity market to jack up its internal resources.
The meeting had skipped the contentious issue of deciding the rate of interest for its 4 crore subscribers and postponed it for the next meeting to enable Labour Minister Oscar Fernandes to discuss the matter with Finance Minister P Chidambaram.
The Finance Ministry had suggested that 0.5 per cent of the EPF money should be invested in equity market, but the EPF Board decided not to make investments in the stock market because of its volatility.
The EPF Board, however, permitted investment in National Savings Certificate and Post Office Term Deposit Receipt. It also permitted Term Deposit Receipt with private sector banks subject to limit of five per cent of the deposit base.
Leftist trade unions fear that crash in stock market would ruin the hard-earned money of the EPF subscribers. The government had cut the rate to 8.5 per cent for 2005-06 from 9.5 per cent in 2004-05 as investment in government-run Special Deposit Scheme (SDS), which gave only eight per cent interest, did not suffice.
At the present rate of 8.5 per cent, EPFO will have Rs 450 crore deficit and a reduction by half a per cent will leave it with marginal surplus of Rs 10.25 crore.
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