No EPFO investment in LICHF till loan scam probe ends

NEW DELHI: The government may defer further investment of employees provident fund money in LIC Housing Finance till investigations into the multicrore bribes-for-loan scam involving the company are complete.

The finance & investment committee, which advises the central board of trusties of the employees provident fund organisation , has recommended that further exposure of EPF money to the scam-hit housing finance company should be frozen Rs A final decision on the issue will be taken at the board of trustees meeting later this week.

“The FIC has proposed deferring further investments in LIC Housing Finance Ltd till the whole issue is clarified,” a labour ministry official said.

The loan scam came to light on November 24 when investigating agency CBI arrested Ramachandran Nair, CEO of LIC Housing Finance along with seven other officials for allegedly colluding with middlemen to approve large corporate loans flouting prudent exposure norms and other mandatory conditions.

EPFO’s current exposure to LICHF is to the tune of Rs 454 crore, while the investment limit set by the government based on net worth is Rs 846 crore. “This means an additional Rs 392 crore could be invested in the company,” the official said, requesting anonymity.

EPFO handles retirement savings of roughly 4.7 crore subscribers and has a corpus of over Rs 3,00,000 crore. According to experts, the suggestion of not increasing exposure to the company at the moment makes sense as there may be other problems waiting to erupt.

“So far only one cockroach has come out. There may be others lurking in the corners,” pointed out Dhirendra Kumar, CEO of Valueresearch Online, a market research agency. The government should wait for the matter to settle, he said.

The board of trustees, in its December 9 meeting, will also decide on raising the exposure limits in highly rated public sector securities where the limits are exhausted or nearly-exhausted Rs

The FIC has proposed higher investment limit in AA+ and AA rated public sector banks, public sector financial institutions and public sector units (PSUs).

“If one’s mandate is to only protect investment then it is a good idea. But if it is to move beyond depressing returns, then it is not in the best interest of investors,” said Gautam Bhardwaj, director, Invest India Economic Foundation.
Path of denial

The Trigger
The finance & investment committee of EPFO has recommended that further exposure of EPF money to LIC HF should be frozen

Up Next

A final decision on the issue will be taken at the EPFO board of trustees meeting on December 9

Also on Agenda

Board will also decide on exposure limits in highly rated public sector securities where limits are exhausted or nearly-exhausted

Money Matters

EPFO’s exposure to LICHF is Rs 454 cr, while the investment limit set by the govt is Rs 846 cr. EPFO has a corpus of over Rs 3,00,000 c and handles retirement savings of roughly 4.7 crore subscribers