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Assess investments in IL&FS, EPFO tells exempted firms

The EPFO’s own investment is nearly Rs 574 crore in IL&FS bonds and so far there has been no default, the official said adding that the retirement fund body may consider moving NCLT if there’s non-payment of interest.

By: ENS Economic Bureau | New Delhi |
Updated: February 26, 2019 5:17:35 am
Provident Fund Organisation, Employees Provident Fund Organisation, EPFO, IL&FS, IL&FS crisis, IL&FS debt, business news The official said that since exempted establishments are responsible for their investments, so the loss would be borne by them, not employees.

The Employees’ Provident Fund Organisation (EPFO) has written to 1,374 exempted establishments, which maintain their own provident funds, to assess the amount of their investments in crisis-hit infrastructure finance company IL&FS, an official said.

The official said that since exempted establishments are responsible for their investments, so the loss would be borne by them, not employees.

The EPFO’s own investment is nearly Rs 574 crore in IL&FS bonds and so far there has been no default, the official said adding that the retirement fund body may consider moving NCLT if there’s non-payment of interest.

After assessing the loss of exempted establishments from their investments in IL&FS, the EPFO would provide the findings of the survey to the government. The EPFO has also written to the ministries of corporate affairs and finance to protect the body in such a situation though it is a miniscule amount in view of its overall corpus of over Rs 10 lakh crore with investible deposits of Rs 1.5 lakh crore at hand every year, the official said.

“The EPFO has begun a survey to assess the quantum of investment made by as many as 1,374 private provident fund trusts regulated by it. The findings of the survey would be provided to the government,” according to the source.

The EPFO will approach the National Company Law Tribunal (NCLT) in case of any default on interest payment. “Some of the pension funds had reportedly approached the NCLT after default on interest payment by the IL&FS but it is unlikely that it would default at time of maturity of bonds. The EPFO investment in

IL&FS bonds are due to maturity between 2021 to 2024,” the official said.

The issue of impact of defaults by IL&FS on the retirement funds managed by private companies had also came up for

discussion in the meeting of

the EPFO trustees chaired by Labour Minister Santosh Gangwar last week.

The retirement fund body is also working on a proposal for automatic transfer of EPFO amount in case a subscriber changes jobs. “A new facility is being tested where instead of the employee filing a transfer form, the facility will ensure auto-transfer as soon as the employer files an ECR (electronic challan cum return) with EPFO,” the official said.

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