EPF Board defers decision on interest rate

The EPF Board on Saturday once again deferred decision on the contentious issue of interest rate for its four crore subscribers till the next meeting to facilitate more consultations between the Labour and Finance ministries.

Labour Minister Oscar Fernandes, chairman of the EPF Board of Trustees, said some more time was needed to fix the rate for the current fiscal.

Sources said the trade unions participating in the meeting rejected a suggestion for eight per cent interest rate for 2006-07 and 8.25 per cent for 2007-08.

The rate of interest for 2005-06 was 8.5 per cent. The EPF Board met when the overall interest rates in the economy have shot up and some of the banks have started paying as much as 9.5 per cent interest on the fixed deposits.

There has been a consistent demand from Leftist trade unions to hike the rate to over nine per cent, on the grounds that EPF subscribers cannot be paid less than the market rates.

At its last meeting, the Central Board of Trustees of the EPF had rejected Finance Ministry's proposal to invest five per cent of the EPF money in the equity market to increase its internal resources.