The Union government has decided not to change interest rate on the Employees Provident Fund (EPF), despite the fact that banks have lowered deposit rates, following a revision of key lending rates by the Reserve Bank of India. The country’s largest public sector lender, the State Bank of India, in a line with other banks, lowered deposit rates by 25 to 50 basis points in May.

The Employees Provident Fund Organization (EPFO), in a major relief to over 45 million employees, today decided to retain interest rate of 8.5 per cent for the financial year 2009-10. Earlier, the Central Board of Trustees (CBT), chaired by Labour Minister, M Mallikarjun Kharge had given its nod to the decision and it would now go to the Finance Ministry for ratification.

EPFO suffered a revenue deficit of Rs 139 crore deficits in 2008-09 and it is not in the position to increase interest rate more than 8.5 per cent given the prevailing financial scenario. Meanwhile, the board has yet to take a decision about investing 15 per cent of its capital in equity for generating Rs 25,000 crore.

Mr. Kharge said: “We will separately look into it (investing in stock markets). Naturally, safety and security is the most important. The returns are also important. Looking at all those things, we (will) decide.”