The Employees Provident Fund Organisation (EPFO) on February 15, 2011 decided not to invest in the stock market in view of the finance ministry’s refusal to provide any guarantee on returns and safety of such investments.
It also stuck to its decision to pay 9.5 per cent interest rate on the provident fund deposits for 2010-11, a move which will benefit some 4.71 crore employees.
The finance ministry had refused to give any such guarantee saying that “there is no question of government providing the sovereign guarantee to any provident fund.” The EPFO has Rs. 5,00,000 crore in funds which could have given a big boost to the stock market.
EPFO has been giving 8.5 per cent interest on EPF deposits since 2005-06.
But this year it raised the interest rate by one per cent after an accounting review disclosed a surplus of Rs. 1,731.6 crore in its interest suspense account. However, the finance ministry had rejected it as it was doubtful about the surplus funds and had ordered a special audit.