It is provident fund not 'profident fund'. Provident fund is the mandatory deduction of 12 percent of your Basic salary every month by your employer who makes a matching contribution. The accumulations can earn interest at a rate announced by the Central Board of Trustees of the Employees Private Fund Organization (the last announced rate was 8.5 percent). The contributors get tax exemption under section 80AC. A person may increase his own contribution up to 100 percent of his Basic (there is no compulsion on the employer to increase its contribution beyond the basic 12 percent of the employees Basic)
Provident fund is important because it funds retirement expenses. By default, it is a debt component in your portfolio. You can supplement it with high risk and high growth investments (like equity based mutual funds) to meet long term goals like retirement.

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