Interest rate: EPF Board defers decision

New Delhi: The EPF Board, which met on Saturday to decide on interest rate, once again deferred its decision on the contentious issue.

The decision has been deferred till the next meeting to facilitate more consultations between the Labour and Finance ministries.

The meeting was told by Labour Minister Oscar Fernandes, who is the chairman of the EPF Board of Trustees, that some more time was needed to fix the rate for the current fiscal.

According to sources 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.