A Parliamentary panel today asked the Central government to increase the rate of return on provident fund for its employees in the light of rising bank rates and EPFO's decision to hike its rate to 9.5% for 2010-11.
"The rate of interest on General Provident Fund (GPF) which is pegged at 8% may be reviewed so that government employees are not put to any disadvantage more so now when the interest rates for bank deposits has also been raised," the Standing Committee on Finance suggested in its report.
If the suggests of the panel finds favour from the government, over 50 lakh Centre's employees will stand to benifit.
The panel headed by former Finance Minister Yashwant Sinha, pointed out that retirement fund body Employees Provident Fund Organiation has also increased rate of interest on PF deposits to 9.5% for 2010-11 from 8%.
The EPFO had been paying 8.5% interest on PF deposits since 2005-06. In September last year, it had recommended an increase in interest rate to 9.5% for 2010-11 after discovering Rs 1,731 crore surplus in their books of accounts.
In the present scenario, the bank rates are also increasing. Reserve Bank of India has increased its short term lending and borrowing rates by half a percentage point to 8 and 7%, respectively in its recent quarterly review unveiled on July 26.
Following the central bank's rate hike, some private and public sector have also hiked their rates.