Money & Banking
10,932 companies default on PF payouts
It should have taken 30 days for Sanjaya Kumar (27) from Odisha to withdraw his father's provident fund of Rs40,000, the post-employment, rainy day retirement stash that companies must compulsorily deduct from salaries.
 
Instead, more than 1,825 days have passed since Kumar's father Krushna Chandra (53) died in 2011. “Please help me withdraw PF money, my mother is worried about losing it,” said Sanjaya, in a complaint posted on an online forum.
 
More than 10,000 companies -- including 1,195 state-owned -- nationwide have defaulted on provident-fund payments: 2,200 companies owe at least Rs 2,200 crore-to the EPFO, the portion of employee salaries they should have deposited.
 
The numbers of defaulting companies and institutions is growing. There were 10,091 defaulters in 2014-15, rising to 10,932 by December 2015.
 
Online consumer forums are flooded with complaints like those of Kumar's, as hundreds of employees who have quit or retired from a company are deprived of their provident fund.
 
“We get lots of complaints from workers who have been denied their provident fund and also complaints of collusion between EPFO officials and employers,” said All-India Trade Union Congress secretary and EPFO trustee D.L. Sachdev.
 
A detailed questionnaire sent on June 29, 2016, to the Central Provident Fund Commissioner and the Central Vigilance Officer of EPFO and reminders on August 1 went unanswered.
 
In Budget 2015-16, the government decided to tax a part of provident fund. But widespread nationwide protests -- some violent, especially in Bangalore -- forced the government to rescind the decision.
 
The rainy day solution, hobbled by defaulting companies 
 
Provident funds are meant to provide financial security to salaried employees, who must contribute 12 per cent of their monthly salary with the employer contributing 13.6 per cent.
 
Companies or institutions with more than 19 employees deposit the provident fund of each with the EPFO, which in turn deposits the money in an employee account that earns 8.8 per cent interest from the government, which invests the provident fund in government securities and corporate bonds.
 
While employees can withdraw the entire amount after retirement or two months after resigning from a job, the EPFO allows partial withdrawals to pay for a home, education, marriage or an illness.
 
Establishments that deduct contributions from employees' salaries, but do not deposit it with EPFO are termed defaulters.
 
Tamil Nadu, including Pondicherry, has India's largest number of defaulting companies (2,644), followed by Maharashtra (1,692) and Kerala, including Lakshadweep (1,118).
 
The Airports Authority of India tops the list of defaulting institutions with a Rs-192-crore default, followed by HBL GLOBAL, Mumbai, and Ahluwalia Contracts India Limited, Delhi, with Rs 64.5 crore and 54.5 crore, respectively.
 
By region, Thiruvananthapuram leads with 247 defaulters, followed by Kolkata with 173 and Bhubaneswar with 115.
 
Companies that form their own provident-fund trusts for employees are exempt from signing up with the EPFO. In such cases, trustees are selected from company workers.
 
Defaulting companies must pay a penalty with an interest rate of between 17 per cent and 37 per cent, depending on the period of default.
 
EPFO set for a Rs 33-crore image makeover, but problems are deeper
 
The EPFO is set for a Rs 33-crore image makeover, which includes professional social-media management and advertisements in print and broadcast media, Mint reported on July 5, 2016.
 
But the EPFO'S role as a custodian of employee savings faces deeper problems: it does not tell employees that companies are defaulting until they come to settle; cases waiting for settlement are rising; and corruption with the organisation endures.
 
The number of EPF cases pending settlement in 2015-16 increased 23 per cent over the previous year. Although 228 police cases were registered, 14,000 inquiries started against defaulting establishments and Rs 3,240 crore was recovered in 2014-15 from defaulters, the EPFO was short of 6,000 employees on March 31, 2015. Fewer employees affect the organisation's ability to enforce provident-fund rules.
 
There has been a four-fold increase in cases filed by EPFO to prosecute defaulting employers over the four years ending 2015, from 317 in 2012-13 to 1491 in 2014-15.
 
As many as 322 corruption cases were ongoing or concluded against erring EPFO officials between 2012-February 2015. Since then, corruption cases have dropped: 167 in 2012, 75 in 2013, 72 in 2014 and 8 till February 2015.
 
One reason could be that an EPFO executive officer was previously given charge of an area to ensure employers within that jurisdiction did not default.
 
“Now notices to defaulters are sent from the Head Office, and there is no officer who can be held responsible if the company defaults in payment,” said Vivek Kumar, a former EPFO director of vigilance.
 
Back in Hyderabad, the reasoning makes no difference to Sanjaya Kumar.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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COMMENTS

navneet choudhary

7 months ago

This is really a pain for most of the employees as they believe that since the company is deducting the money it is getting deposited and is in safe hands being unaware about its flipside. The government must take punitive damages from the Companies defaulting the PF so that these defaults are not being made.
There are various companies which do not pay the PF and consider as general creditors and continues to deduct from the employees, it when the employee leave they come to know about this.

krishna

7 months ago

EPFO is a fraud/ bogus financial institution. It should be closed permanently.

When I changed job, I applied for transfer of AMT from Hyderabad to Chennai office. It got rejected thice. The epfo employees at IT-Hub Chennai are using premitive methods, those procedures which existed during British rule under Queen Elizabeth. On enquiry on transfer, they are asking "cheque" number. Finally I approached Hyderabad office. My former company is closed, and taken over by different company. I was asked to fill varios forms, get a notary affidavit filled and other numerous forms. After 30 days I checked status , it says "Rejected! Reason for rejection not available in database" . This is hilarious. EPFO does't know why it rejected!!! We see such things in a comedy show or in mental asylum, not in a central govt financial institution.

EPFO is not giving any retirement pension or insurance or doing any favor.

It is simple variable recurring deposit if account is active. If inactive, it is simple fixed deposit.

In information technology generation, if there is no pf credit for more than 12 months, simply transfer the amount to newer account, which can be tracked using pan card or that shitty UAN number. If no new account exist then do a auto NEFT to subscriber bank account.

This should take 1 working day automatically. No need to fill junk forms.

Every Indian with pan card should declare his Permanent account number as his lifetime account. E.g he may choose ICICi as his Permanent account number. If he didn't like service s, he may choose to change to SBI.

If bank AC or epfo account becomes inoperative, people are interested to LOOT the account money rather than transfering it his Permanent account.

But if inoperative account has loan attached, then they don't leave him. They hunt the customer using goons

Arunachal Pradesh ex-CM Kalikho Pul commits suicide
Former Chief Minister of Arunachal Pradesh Kalikho Pul has committed suicide at the chief minister's residence in capital city Itanagar, the state police said on Tuesday.
 
Arunachal Pradesh Deputy Chief Minister Chowna Mein confirmed the news to IANS.
 
The police said that Pul, 47, hanged himself from a ceiling fan at his residence. 
 
Although Pema Khandu became the Chief Minister of the state on July 16, Pul was yet to vacate the official residence.
 
"We have also recovered a suicide note from the room where the former Chief Minister committed suicide. However, I am not in a position to divulge much at this moment," said a senior police official.
 
Pul assumed office on February 19 unseating the then Chief Minister Nabam Tuki and continued till July 13 when the Arunachal Pradesh Congress Legislature Party (CLP) elected Pema Khandu.
 
After becoming the Chief Minister, Pul and his supporters joined the Peoples Party of Arunachal (PPA), a regional political outfit. However, after the Supreme Court judgment reinstated the Nabam Tuki government, Pul and his supporters returned to the Congress fold and supported Pema Khandu as the Chief Minister.
 
Pul, who represents Hyuliang constituency in eastern Arunachal Pradesh, had been winning from the constituency for last five terms. He had served in various capacities in the Arunachal Pradesh cabinet including as the finance minister, power minister and tribal affairs minister.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Ponzi schemes not under our regulatory control: SEBI to SC
Market regulator Securities and Exchange Board of India (SEBI) has told the Supreme Court that ponzi schemes do not fall under its regulatory regime and it was for the state governments to act against them.
 
The SEBI told a bench of Chief Justice T.S. Thakur, Justice A.M. Khanwilkar and Justice D.Y. Chandrachud that the ponzi schemes were banned under the Prize Chit and Money Circulation (Banning) Act, 1978 and it was for the state governments to enforce the law.
 
The SEBI was responding to a petition by an NGO, Humanity Salt Lake, seeking the court's intervention to check and control the menace of the illegal collection of money in the garb of collective investment schemes.
 
SEBI said by examining the complaints on unauthorised money mobilisation it appeared that the overwhelming majority of complaints fall under Prize Chit and Money Circulation (Banning) Act, 1978 and Protection of Interest of Depositors Act that fall under the domain of state governments.
 
SEBI also informed the bench that Uttar Pradesh, Rajasthan and Arunachal Pradesh are the only states which don't have law to protect the interest of the depositors from fly-by-wire companies collecting money from the public.
 
Five Union Territories -- Chandigarh, Andaman and Nicobar, Dadar and Nagar Haveli, Daman and Diu and Lakshadweep -- too have not enacted laws to protect the gullible investors. 
 
Pointing out that the banned activities could not be controlled by any regulator, the SEBI told the court that between April 2013 and March 2016, it received 1,956 complaints, out of which it issued interim order in respect of 76 involving Collective Investment Scheme (CIS) and 223 involving Deemed Public Issue (DPI) rest 1657 were referred to other agencies.
 
The market regulator said that Collective Investment Scheme within the domain of SEBI was not a banned activity but was authorised only upon registration/permission by it.
 
"In the absence of such registration/permission, such schemes are not allowed to operate and have to be stopped," said SEBI, adding that it had often acted after being informed or by taking suo motu cognisance of the schemes operating in the market to defraud the people.
 
The CIS is the money being collected by way of unauthorised multi-level marketing, pyramid marketing schemes and ponzi schemes without permission of competent authorities. 
 
On the action initiated by it against the unauthorised mopping of the money by the companies, SEBI told the court that till June 30, 2016 it had initiate action against 60 cases involving CIS and DPI, with total amount standing at Rs54,802 crores.
 
It said that it had attached 199 properties and recovered Rs215.50 crores. 
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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COMMENTS

Ramesh Poapt

7 months ago

OMG! Many many MLF required, if it is
nobody's duty!

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