Government approves 8.75% interest rate on Provident Fund for 2014-15 :: Economic Times

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The finance ministry has ratified the Employee Provident Fund Organisation's decision to retain interest rate on PF deposits at 8.75%, benefiting over five crore people. The central board of trustees of the Employee Provident Fund Organisation had earlier decided to retain the interest rates at the previous year's level.

However, the government's keenness on attracting a portion of the EPFO's Rs 6.5 lakh crore corpus into equity and housing infrastructure finance companies may have to wait as the EPFO trustees board on Friday decided to set up an expert committee to look into the matter.

"We have decided to set up an expert committee that will evaluate several investment instruments, including investment in equity and housing infrastructure finance companies," said Labour Minister Bandaru Dattatreya, who is also chairman of EPFO central board of trustees (CBT).

The committee, which will be set up following a directive from finance ministry shortly, is expected to submit its recommendations by the next CBT meeting due next year.

Gauri Kumar, labour secretary, said: "The committee will look at the totality of investment climate and make recommendations, balancing the return and risk carefully from such investment." In the 205th meeting of CBT on Friday, the board decided to set up a separate committee to work out a possible scheme to enable EPFO subscribers to own a house, in line with the government's policy to focus on affordable housing and ensure housing for all by 2022. Currently, EPFO subscribers with a five-year-old account can withdraw a significant portion of their savings for buying a house.

Annually EPFO subscribers withdrawRs 3,000 crore for housing.

Besides, CBT has now agreed to increase the EPFO exposure in bonds of banks having up to 3% of nonperforming assets, thus bringing another 12 banks into its fold. Until now, EPFO could invest in PSBs having NPAs up to 2% only and only eight banks qualified for this.

The EPFO board has also decided to bring down the duration of settling provident fund queries to 20 days from 30 days, fastening the entire process besides allowing EPFO to open accounts in other public sector banks, besides the SBI.