When asked if there's a case for increasing the EPF rate in view of the rising inflation, he said the government could not increase the interest rates on special deposit schemes (SDS), where the bulk of EPF funds are parked.
"SDS gives 8 per cent return. You cannot touch that 8 per cent because that applies to many instruments. So, it cannot be looked at in isolation," he said.
The EPFO, he added, was welcome to take money and invest it elsewhere for better returns. "We told them (EPFO) two-three years ago that you can withdraw the SDS money and invest it elsewhere," he said.
The finance minister's statement comes after some members of the Central Board of Trustees of the EPFO raised the demand for increasing the interest rate from 8.5 per cent to 12 per cent in view of the rising inflation.
The EPFO board had earlier rejected the proposal to invest 5 per cent of its funds in the stock market following opposition from trade unions.
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The board, at meeting of the trustees on July 5, deferred the decision on interest rates.
With inflation inching towards the 12 per cent mark, the 8.5 per cent interest rate fetches negative real returns.