Is it permissible to take interest on provident fund, which is discretionary?
Answer
No. It is not permissible. When you are given this discretion to allow your provident fund to be credited with the amount of interest, which these funds are getting on investment, that interest is indeed Riba. A God-fearing Muslim should refuse riba to be credited to him. If it gets added, nevertheless, by default (for it is, at times, not possible for the authories to customise for individuals), you should be aware of the exact amount of interest, so that you may draw that much, and pass it onto some poor or needy person(s), or institution(s) helping them out. Riba is not for you to make use of, for it is haraam under all circumstances.
I hope this suffices.