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Provident Fund interest rate cut likely

A further interest rate cut on employment provident fund is likely to be announced on Tuesday after a meeting of the EPF central board of trustees.

The meeting, to be presided over by Labour Minister Sharad Yadav, will decide the rate of interest, taking into consideration the continued fall in the yield on bonds and securities in the last two years due to easy liquidity, poor credit offtake and the cut in the credit reserve ratio by the Reserve Bank of India, an official media release said on Monday.

EPF subscribers were getting an interest rate of 12 per cent from its inception in 1989 till July 2000 when it was brought down to 11 per cent. The rate was further reduced to 9.5 per cent for the current financial year.

The corpus of EPF is placed at Rs 599.39 billion, as on December 31, 2001. Of this, 79.55 per cent is in investment holding in special deposit scheme, 8.18 per cent in public sector and financial institutions, 7.06 per cent in central government loans, 3.95 per cent in state government loans and 1.26 per cent in government guaranteed loans.

Tuesday's board meeting will also consider the proposed amendments to the EPF and Miscellaneous Provision Act 1952 in lieu of the mobility of workforce from formal to informal sector due to the increase in the outsourcing of work.

The proposed amendments include policy changes for increase in coverage, reducing the threshold limit for coverage, introduction of unemployment insurance for PF subscribers having lost jobs due to ongoing economic restructuring.

UNI

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