Finance ministry asks EPFO to reduce annual fund payout of 8.65%: Report

There are concerns that the high return would hurt the economy by reducing banks' ability to lend at attractive rates

Finance ministry has demanded the social security and pension fund cuts the 8.65 per cent annual return it was planning to offer about 85 million member workers, according to a ministry memorandum reviewed by Reuters.

The reason is that the yield may not be justified given the fund's performance but two officials with knowledge of the discussions said the bigger factor is concern the high return would hurt the economy by reducing banks' ability to lend at attractive rates.

The Employees' Provident Fund Organization (EPFO), which is administered by the labour ministry, announced just before the recent April-May general election