One of the changes proposed under a change to the governing law of the fund is to allow worker to withdraw up to 30 percent of their balances after a membership of 10 years.

The fund is a forced savings scheme which is a useful bulwark for people's old age, but its managers had come under fire for acting in favour of the state, rather than discharging the fiduciary responsibility owed to the funds beneficiaries.

EPF superintended D Wasantha says about 50 percent of housing loans granted by banks using fund balances as collateral are in default.

Mortgage borrowers default on installments expecting the banks to foreclose on their EPF balances, in a de facto early withdrawal. Fund holders then have to pay penal interest rates and their credit records are also besmirched forever.

Offcials hope the early withdrawal facility will reduce the incentive to borrow and default against fund balances.

Officials say provisional data shows that in 2008, the outstanding balance of the fund has grown 16.5 percent to 653 billion rupees from 560.0 billion rupees which is about 13 percent of gross domestic product (GDP).