Laws & Regulations
Notice of PBOC, MOURD and MOF Released in Regard to Bettering HPF Personal Account Deposit Interest Rate Formation Mechanism
2016-02-17

Notice of the People’s Bank of China, Ministry of Housing & Urban-Rural Development and Ministry of Finance on Bettering Housing Provident Fund Personal Account Deposit Interest Rate Formation Mechanism (BI No. 43-2016) has been released recently after approval by the State Council, with adjustments made to housing provident fund personal account deposit interest rate(s), so that the current collection time based dual rates, tantamount to the prevailing demand deposit rate and three-month time deposit benchmark rate respectively, shall be replaced as of February 21 by the unified rate equivalent to the prevailing one-year time deposit benchmark rate for interest calculation.

 

Our nation’s housing provident fund system aims to help paying employees with their housing problems solution mainly by loaning the funds gathered jointly by the state, the entities and the employees at low interest rates. The principle of “Low in and Low out, Break Even and Meager Profit” on applicable interest rates has been observed since 1996, with levels of interest rates set for provident fund personal account deposits based on collection time, namely, using prevailing demand deposit rate and three-month time deposit rate for funds collected in the fiscal year and carried forward from the previous year respectively. The current rates are 0.35% and 1.10% respectively. After the adjustments, the prevailing one-year time deposit benchmark interest rate shall be used for housing provident fund personal account deposits with a unified approach, with the current rate at 1.50%.

 

The measure on bettering housing provident fund personal account deposit rate formation mechanism is a significant step taken to execute the mandate of building an open and normative housing provident fund system and boost measures for ameliorating the mechanism for housing provident fund withdrawal, use and monitoring, as specified in the resolutions of the Third Plenay Session of the Eighteenth Committee of the CPC, in a bid to perfect housing provident fund system. It is conducive to protecting legitimate interests of paying employees in further pursuit of fairness and effectiveness of the housing provident fund system, with maturity brackets reduced and aligned with the direction of the market-oriented reform. It also marks redistribution of the proceeds from housing provident funds and employee account deposits, without nudging up the level of interest rates on a broader scale or adversely affecting the normal management and operation.