Retirement fund manager Employees’ Provident Fund Organisation’s (EPFO’s) trustees are likely to approve a proposal to recommence investment in LIC Housing Finance at their meeting scheduled on February 15.
EPFO's apex decision-making body, the Central Board of Trustees, headed by the labour minister, had decided to suspend further investment in LIC Housing Finance till the Central Bureau of Investigation (CBI) completed its probe into the alleged involvement of the home loan company’s top official in the bribes-for-loans scam. However, CBI is yet to complete its investigation into the scam.
EPFO had invested Rs 454 crore in the bonds of LIC Housing Finance Company. The fund manager’s prevailing investment norms allow for investment of up to Rs 846 crore in the company.
LIC Housing Finance company is a subsidiary of LIC, the largest insurance company in India.
EPFO's advisory body, Finance and Investment Committee (FIC), took up the issue in its meeting on January 28 and recommended resumption of investment in LIC Housing Finance. It is a general practice that recommendations of FIC are upheld by CBT.
At the meeting, member A D Nagpal, who is also one of the unionists, supported fresh investment in LIC Housing Finance. Nagpal, who is the secretary of the Hind Mazdoor Sabha, had said investment could be resumed in view of the explanation given by the finance ministry and reaffirmation of the highest rating for the lender by Crisil and CARE.
In his letter to Labour Secretary P C Chaturvedi in December, Department of Financial Services Secretary R Gopalan had asked for remedial measures in respect of the EPFO’s decision not to invest any further amount in LIC Housing Finance.
“Recently, both Crisil and CARE rating agencies have reaffirmed their highest rating of AAA/P1+ on LIC Housing Finance debt instruments, banking loans and commercial papers and public deposits,” Gopalan said.
Gopalan also expressed concern that the EPFO's decision to press the panic button and suspend further investment in LIC Housing Finance resulted in negative publicity.
In November, CBI had arrested LIC Housing Finance CEO Ramachandran Nair and seven other senior bankers for allegedly colluding with real estate firms to sanction large-scale corporate loans, overriding the mandatory due diligence involved in such approvals, besides other irregularities.
