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To remove the ambiguity over whether ‘Interest Suspense Account’ (ISA) is a regular account or not, the retirement fund body EPFO is planning to name it as ‘Interest Account’
The issue was debated since last year when the Finance Ministry challenged the discovery of Rs 1,731 crore surplus in the ISA on the basis of Comptroller and Accountant General’s report that the said amount was not verifiable because subscribers’ accounts were not updated.
The controvery arose after September last year, when the trustees of the Employees’ Provident Fund Organisation’s (EPFO) decided to provide higher rate of return at 9.5 per cent for 2010-11, after what it described as Rs 1,731 crore surplus in ISA.
The ministries of Labour and Finance remained at logger heads for almost six months over the issue whether the surplus was real or not, and if the EPFO’s offered rate of return was feasible.
However, the Finance Ministry on March 17 ratified the 9.5 per cent rate of return to over 4.71 subscribers of EPFO.
The ministry’s approval is subject to the condition that any shortfall on account of payment of 9.5 per cent rate of return would be met by EPFO through making adjustments in the interest rate in 2011-12.
It also asked the provident fund body to update all its subscribers’ accounts in the next six months. Now, the proposal to change the name of ISA will be placed before the Employees’ Provident Fund Organisation’s (EPFO) apex decision making body, Central Board of Trustees (CBT) in its meeting scheduled on March 30 as per the agenda of the trustees’ meet.
The CBT, which is headed by the Labour Minister, will look into the issue whether there is a need for changing the name of the ISA as Interest Account where EPPO’s all income receipts on its huge corpus of over Rs 3 lakh crore and other incomes are credited.
Since the interest income to be provided to the subscribers is credited one year in advance and transferred to the account holders (workers) in the next fiscal, it always shows huge balance, the EPFO points out in the proposal.
The proposal further says that the very connotation ’Interest Suspense Account’ coupled with huge balance in it, has led to doubts in the mind of the people about the regular nature of the account and surplus in it.
After the CBT nod, government will amend Employees’ Provident Funds and Miscellaneous Act 1952 to make the change effective.
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