Employees Provident Fund subscribers will receive 8.5% interest on their deposits

The meeting of the Central Board of Trustees (CBT) of the Employees Provident Fund Organisation (EPFO) took place today. Chaired by Mallikarjun Kharge, CBT talked about the interest rates of the provident fund for the current fiscal year. In the meeting, it has been decided that that 45,00,000 subscribers will get 8.5% interest in 2009-2010 fiscal year on their provident funds.

The decision came at a time when banks are lowering its interest rates. In May 2009, State Bank of India, the largest lender of the country, cut its interest rates by 25 to 50 basis points. Other state-run banks also cut their interest rates. Indian Bank cut its lending rate by 50 basis points from 12.5% to 12% which came into effect from July 1, 2009. Indian Overseas Bank announced to cut its lending rate by 0.5%. The decision to retain the interest rate at 8.5% was “on expected lines.”

For the fifth time in a row, the interest rate has been kept at 8.5%. The decision will be forwarded to the Finance Ministry for ratification. In total, Rs. 1.82 lakh crore will be paid and a surplus of Rs.64,00,000 will remain in the current fiscal year.

Related articles:

The Economic Times

Indopia

State-run banks in India are cutting their lending rates

After State Bank of India reduced its lending rate last week, other state-run banks in India are slashing their lending rates. Indian Bank slashed its lending rate by 50 basis points from 12.5% to 12% that started from July 1, 2009. Indian Overseas Bank (IOB), another state-run bank announced to cut its lending rate by 0.5% to 12%. This comes in the face of State Bank of India, the largest Indian bank slashed its lending rate by 11.75% last week. The Times of India reports:

The benchmark prime lending rate (BPLR) was revised downwards by 50 basis points effective from June 29. SBI had last reduced BPLR by 75 basis points on January 1, 2009. Following SBI's move, many other public sector lenders, including Allahabad Bank, reduced BPLR by 50 basis points.

In order to attract more customers the banks are now softening their lending rates. Union Bank of India and IDBI Bank are cutting its lending rate by 0.25% that also comes into effect from July 1. State Bank of Mysore, cut its lending rate by 50 basis points and deposit rate by 25 basis points.

Related articles:

The Times of India

Business Standard