EPFO to retrieve investments in NBFCs after default scares: Report

The EPFO’s Finance, Investment and Audit Committee (FIAC) has discussed plans to gain early repayment of investments in non-banking financial companies (NBFCs), amid a slew of defaults and downgrades, the Hindu BusinessLine reported on May 22.

The FIAC is a sub-committee of the Central Board of Trustees (CBT), chaired by the Union Labour and Employment Minister, which will make the final decision on extracting investments from select NBFCs in June or July, the report stated.

The paper noted that Employees Provident Fund Organisation’s (EPFO) has Rs 574.73 crore worth of exposure in the crumbling Infrastructure Leasing and Finance Services (IL&FS), according to data from the Labour Standing Committee. The paper also noted that the EPFO’s total debt stood at Rs 9.78 lakh crore, as of March 31, 2018, though its investment in NBFCs was unspecified.

The organisation is looking to ensure the safety of workers’ retirement savings on priority but there is no need to panic. Maybe there will be an upgrade in the ratings, sources told HBL.

Around 2,000 companies are also staring at Rs 9,000 crore drain down of provident and pension funds due to investments made in various IL&FS firms.

The companies, which includes public and private players such as SBI, BPCL, IOC, Food Corporation of India, Infosys, Tata Power and Lupin, who have the onus of making good on the loss in principal and interest income by these funds, as per the Employees’ Provident Fund Scheme (EPFS), 1952.