ISLAMABAD, July 25: The federal government has reduced the rate of profit on deposits and balances of the provident fund from 14.50 per cent to 13.50 per cent with retrospect effect from July 1, 2003, it is learnt.

The finance ministry sources told Dawn on Sunday that the ministry of railways and ministry of defence have been excluded from this profit rate cut. The two ministries would be dealt with separately.

A notification issued by the regulations wing of the finance ministry said that the rate of profit on deposits and on balances at the credit of subscribers to the general provident fund and similar other funds for the year 2002-03 was fixed under finance divisions No. F.1(2)-reg.7/88-494/2003 dated July 8, 2003, at the rate of 14.50 per cent per annum.

"It has now been decided that the rate of profit applicable to the subscriptions and the balances in the various provident funds during the financial year beginning on the Ist of July, 2003, shall be 13.50 per cent per annum," the notification said.

The provident funds include general provident fund (GPF) and contributory provident fund (CPF). The notification said that necessary instructions regarding the rate of profit applicable to the balances in the various provident funds under the control of the ministry of railways and the ministry of defence for the year in question will be issued separately by these ministries.