Central Board of Trustees of the Employees Provident Fund said that it was more than willing to take over the provident funds, which the companies are managing themselves after getting the required exemption, if they find it difficult to give the stipulated nine per cent interest.

Central provident fund commissioner Ajay Singh told reporters that currently there are about 2,600 exempted funds covering 38 lakh (3.8 million) members, adding these funds manage only around Rs 35,000 crore (Rs 350 billion).

This comes in the wake of reports that several companies might surrender their exempt status and allow the Board of Trustees to manage the money in view of the gap between the prescribed nine per cent and the actual returns from investments.

Those funds formed after 1998 were not mandated to invest in Special Deposit Scheme and had invested in securities when the interest rates were higher, Singh said, adding these funds might not have any problem in offering nine per cent.

Singh further added that the penalties imposed on the employers failing to remit the PF would be 12 per cent in the first year, 17 per cent and 100 per cent in the subsequent years, Singh said.

While the workers would be paid the stipulated interest, the remaining, which is the difference between the stipulated and the penalty interest, would go to the fund.

He said the excess liabilities towards paying the bonus 0.5 per cent would only be around Rs 200 crore (Rs 2 billion) since it would be given only to those who were "compulsorily" covered.

"It will benefit the workers in the lower income slab," he added.

As for the prescribed 9.0 per cent interest on EPF, he said it could be managed well within the surplus of over Rs 25 crore (Rs 250 million).