Amidst indications of retaining 8.5 per cent interest, the EPF board will meet here on Monday to decide the rate for 2006-07 and 2007-08 for its four crore subscribers.

The meeting assumes significance in the light of Labour Minister Oscar Fernandes’ statement that the government will try to retain the present rate.

Thought EPF’s earnings allow a maximum of 8.25 per cent interest, the Central Board of Trustees is likely to settle for 8.5 per cent interest, with the left-backed trade unions strongly objecting to any further cut.

As the issue could not be thrashed out in past meetings, Mr Fernandes stated that  efforts would be made this time to evolve a consensus, so that the EPF interest was not lowered.

 He is of the view that for 2006-07, the rate of interest would depend on the funds available with the EPF, while the higher rate of interest offered by commercial banks would be taken into account for future calculations. The finance and investment  committee of the EPF Board had observed that only eight per cent rate of interest was sustainable, out of the income of the fund during 2006-07.

Though the  leftist trade unions have been suggesting that since some banks were at present giving upto 10.5 per cent interest, the EPF rates should be hiked accordingly,  the CBT expressed helplessness in paying 8.5 per cent interest, saying it would face a deficit of Rs 450 crore.

The minister had urged members of the audit panel to find out if  some surplus amount was lying accumulated in the interest suspense account, contingency reserve and special reserve funds. After examining the accounts of past few years, EPF officials have identified a surplus of Rs 590.16 crore — which could allow the government to continue paying 8.5 % interest .