The Employees' Provident Fund Organisation (EPFO) has assured its more than 5 crore subscribers that it would secure the finance ministry's approval for the 1% interest rate hike it has declared on provident fund savings for 2010-11. "We are hopeful that after seeing our clarification on the calculation of 9.5% interest rate, based on the surplus discovered (in the interest suspense account), the finance ministry would approve," Union Labour Minister Mallikarjun Kharge said on Tuesday. Kharge was speaking after chairing a meeting of the Central Board of Trustees (CBT), the highest policymaking body of the EPFO.

The finance ministry had refused to ratify CBT's decision to pay a higher interest rate this year after a special audit by the Comptroller and Auditor General (CAG) failed to verify the source of the . 1,733 crore surplus found in EPFO's interest suspense account. The CAG had in its audit noted that interest on members' accounts were yet to be credited and the actual interest liability was, therefore, not ascertainable. In its reply to the finance minister, the labour ministry had said the overall corpus to be distributed among subscribers would remain the same irrespective of whether accounts were updated or not. There was, thus, no valid reason for not giving the higher interest rate, it had said.

On Tuesday, the trustees once again decided not to invest PF corpus into the stock markets, ignoring finance ministry missives on the issue like before. "Because of no guarantee on returns, we don't want to invest in capital markets and run the risk of suffering losses," Kharge told reporters. Labour secretary PC Chaturvedi said the CBT's decision to stay away from the stock markets has been vindicated by the recent fall in stock prices. "The fear of workers' representatives has come true with a more than 2,000-point fall in the stock market over the last few months," he said.

DL Sachdev, secretary of the All India Trade Union Congress and a CBT member, said: "We are custodians of workers' money. It is not finance ministry's business to tell us what to do with it." The CBT, however, acceded to finance ministry's request to lift a freeze it had imposed in November on investments in scam-tainted LIC Housing Finance. This was based on the finance ministry's assurance that investments in LIC Housing Finance were safe, Kharge said, adding that credit rating agencies have not reduced the rating of the public institution after its name figured in the bribery-for-loans scandal. The CBT has approved . 846-crore of investment in LIC Housing Finance in total . Of this, . 454 crore has already been invested. The EPFO manages more than . 3 lakh crore of subscribers' money.

CBT Decision List

o Continue to push for 9.5% interest for the fiscal

o Not allow investment in capital market without guaranteed returns

o To Resume investment in LIC housing finance

o Defer Desicion on amending EPFO Act to check misuse

o Computarisation of 120 offices to be completed by end of the month

Source: http://epaper.timesofindia.com/