Board of trustees okays EPFO exit from DHFL

The central board of trustees has allowed the Employees’ Provident Fund Organisation to exercise an exit option for recovering the pending Rs 600 crore from Dewan Housing Finance Corporation (DHFL), and approved appointment of three fund managers to manage its corpus.

However, the proposal to double the minimum pension to Rs 2,000 has been put on hold, with labour minister Santosh Kumar Gangwar suggesting the issue be taken up with the finance ministry. The decision was taken at the 225th board meeting of the EPFO, chaired by Gangwar, in Hyderabad on Wednesday.

People present in the meeting, which lasted for more than four hours, told ET the board has approved EPFO’s exit from DHFL to retrieve its money for workers’ welfare. Ten-year bonds of the deposittaking housing finance company were due for maturity in 2024. Of its total Rs 1,300-crore bond investments in DHFL, which has defaulted on financial repayment obligations, EPFO has yet to recover ?600 crore.


EPFO is also struggling to recover Rs 574 crore of its bond investments in crisis-ridden shadow lender Infrastructure Leasing & Financial Services (IL&FS).

FUND MANAGERS APPOINTED
The central board of trustees also approveda appointment of UTI AMC and SBI Mutual Fund as its fund managers for a three-year term beginning October 1, following recommendation of the finance, audit and investment committee of EPFO.

Sukumar Damle, secretary, AITUC, told ET that trade unions unanimously opposed the government’s proposal to double minimum pension to Rs 2,000, citing the disparity arising after the government guaranteed minimum pension of Rs 3,000 under the Pradhan Mantri Shram Yogi Mandhan scheme. “The labour minister has assured he will convene a meeting of the central board of trustees’ representatives with the finance minister in a week and the issue will be placed before the ministry for consideration,” Damle said.

He said trade unions have recommended that the government put on hold 15% of its investment in equity on hold, in wake of shaky market conditions, which may result in loss to provident fund investments. “However, the labour ministry indicated that they would continue with the direction of investment in mutual funds,” Damle added.