Toxic ILFS bonds: Ministry asks EPFO if it has surplus to pay interest

IANS 08 May 2019

Economy & Nation

Given the extent of the malfeasance due to the extraordinary risk exposure to virus-infected IL&FS bonds (IANS has done a series of stories), the Finance Ministry has now asked Employees' Provident Fund Organisation (EPFO) whether the fund has enough surplus to pay the 8.65 per cent interest rate for 2018-19.

With 1,400 top-of-the-line companies, schools, MNCs, PSUs and what have you invested in what were originally 'triple A' rated bonds succumbing to the vagaries of a toxic company, the life savings of white and blue collar salaried employees is at peril.

In a letter to the Labour and Employment Ministry, the Finance Ministry asked why the surplus after payment of the EPF interest rate for previous years can be seen only in the fund's 'estimates' and not clearly in the 'actuals'. It has also asked for details about EPFO's exposure to murky entities. The total exposure to EPF and pension funds is Rs 9,700 crore.

In EPFO accounts for 2016-17, there exists information about 'income over expenditure' on a cumulative basis, but it does not provide clear details. In case of a default, the liability to pay to EPFO subscribers would be with the government. That's why due diligence of the EPFO accounts is being undertaken.

The EPFO's investment in IL&FS was pegged around Rs 574 crore by Standing Committee on Labour in its report. Firms, which manage the EPF of their employees on their own, had an even higher exposure to IL&FS than the retirement fund body. The committee had warned the Government that this could put workers at a disadvantage.

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Comments

User

Vilas Gala

6 years ago

I am surprised no action is being taken against credit rating agencies who charge exhorbitant fees with no accountability.Money Life should take up the matter with SEBI or finance ministry and see that they are heavily fined for giving triple ' A' Rating to the ILFS Bonds.

VASANT KULKARNI

6 years ago

FRAUDSTERS ARE VERY SHREWD, THEY CAN EASILY GRAZE ANYWHERE ANYTIME, NO MATTER WHERE THE FUNDS ARE!

Prakash Bhate

Replied to VASANT KULKARNI comment 6 years ago

Masood Azhar and his terrorists are but amateurs when compared to financial fraudsters and their auditor/rating agency/SEBI/RBI/etc accomplices. The Government moved heaven and earth to have Masod declared as a global terrorist but does nothing to financial terrorists who do greater damage to the country.