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| 8.5% interest rate likely for PF depositors |
| Press Trust of India / New Delhi Mar 16, 2010, 20:39 IST |
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The country's largest retirement fund manager EPFO's trustees are likely to announce next month 8.5 per cent interest rate for over 4.71 crore depositors for 2010-11.
The Employees' Provident Fund Organisation's (EPFO) apex body Central Board of Trustees (CBT) headed by Labour Minister Mallikarjun Kharge is scheduled to meet on April 9 and approve 8.5 per cent rate of return on PF deposits for 2010-11, a Labour Ministry source said.
EPFO's advisory body Finance and Investment Committee (FIC), which met last month on February 26, recommended 8.5 per cent interest rate on PF deposits as at this rate of return there would be a surplus of Rs 15.26 crore, he said.
FIC had also said a return of 8.75 per cent for next fiscal would result in a deficit of Rs 426.53 crore. It is a general practice that the FIC recommendations are upheld by the CBT, which is the final authority to take a call.
EPFO has been maintaining the return rate of 8.5 per cent on PF deposits since 2005-06.
Besides this, the trustees would also vet the proposal of evolving a multi-banking model for PF collections as recommended by the FIC. At present, the State Bank of India (SBI) is the sole collection agent for EPFO.
Irked by SBI's unilateral decision to raise charges on PF collections, EPFO is considering handing over the business to other banks.
On December 4, 2009, the EPFO's Executive Committee (EC) had decided that EPFO will start negotiations with other banks for exploring the possibility of switching over the collection business to those.
EC had sought comments of the EPFO's key advisory body Finance and Investment Committee before going ahead. The FIC discussed the issue during its meeting last month and now the trustees would take call on the issue next month.
The EPFO's agreement with the SBI for collection of provident fund returns expired on May, 2008. Soon after the SBI issued instructions to its branch offices to charge Rs 3 per Rs 1,000 compared to Rs 1.5-2 per Rs 1,000.
Besides, the SBI also asked the EPFO to arrange for payment of arrears of difference of Rs 3 per Rs 1,000 and the actual charges paid with effect from May 21, 2008.
Though Finance and Labour Ministries intervened, an agreement between the EPFO and the SBI could not be reached on mutually agreeable terms.
Taking a unilateral decision, the SBI enforced revised collection charges of Rs 3 per Rs 1,000 from December 1, 2009, and stopped implementing the e-challan collection at centres other than Karnal and Gurgaon which were started on experimental basis.
The SBI asked for Rs 2 lakh per branch as facilitation charges for introducing the collection through e-challan, which ensures transfer of funds electronically.
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