The Hindu Business Line : EPF deposits

The Central Board of Trustees of the Employees Provident Fund Organisation (EPFO) had recommended in April that the interest rate on EPF deposits should be 9.5 per cent for 2002-2003. However, the Finance Ministry rejected the recommendation on the grounds that the rate had to be reduced by 0.5 per cent to bring it on a par with the returns of other small saving instruments.

The Finance Ministry took the stand that a higher rate of interest on EPF deposits would be out of alignment with the general interest rate structure. Thus, the stage was set for confrontation between the Finance Ministry and the Central Board of Trustees. In spite of several stresses and strains, the CBT has boldly defended its view and resolved not to yield to the Finance Ministry. The CBT deserves praise for its determination and resolution.

Now, the ball is in the Finance Ministry's court. However, the Finance Ministry seems be cooling its heels. The rules relating to the EPF Scheme, 1952 clearly state that the Centre will decide on the EPF interest rate based on the recommendations of the CBT.

The interest rate for 2002-2003 should have been declared before the commencement of the financial year. It is really deplorable that the Centre, even after a lapse of nearly 10 months, has failed to do so.

Though the EPFO has been crediting interest at 9.5 per cent for the settlements made hitherto, there is no guarantee for the interest rate, unless the Centre declares it officially. Will the Centre be sincere enough to declare the interest rate on EPF, at least before closing the financial year?

C. Ramesh

Keeramangalam (TN)

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