Despite finmin advisory, EPFO to keep LIC HF at arm's length
NEW DELHI: The labour ministry has said it will not reconsider its decision to suspend investment of employees provident fund money in the scam-tainted despite persuasion by the finance ministry. Finmin had assured the EPF Organisation (EPFO) that all assets of the company were secure.
"Sometimes it appears from outside that some institutions are very reliable and good because of their advertisements and other activities, while the reality may be different," labour minister Mallikarjun Kharge told ET.
When our internal auditors, account advisors and financial advisors have all warned us against making further investments, we will naturally go according to that, the minister added.
The EPFO put on hold its plans for further investments in the housing finance company last month after the fund's top policy making body, the Central Board of Trustees, decided that it should wait till inquiry into the bribe for loans scam was in progress.
EPFO's exposure to LICHF is about 454 crore and it can invest 392 crore more keeping within with the investment limit set by the government. The CBI had arrested LIC Housing Finance CEO Ramachandran Nair and seven senior bankers in November for allegedly colluding with real estate firms to sanction corporate loans without considering mandatory conditions for such approvals in addition to other irregularities.
The finance ministry, in a letter to the labour ministry last month, had said that LIC Housing Finance should be looked at as a company and not judged on the basis of individual misconduct. It argued that the company had received top rating (AAA) from credit rating agencies and was fully backed by government-owned insurance company LIC.
Rating agency had recently reaffirmed its highest rating on LIC HF's debt instruments, bank loans, commercial papers and fixed deposit programme. Rating agency CARE , too, has upheld its 'AAA' rating of the company's debt instruments.c
"Sometimes it appears from outside that some institutions are very reliable and good because of their advertisements and other activities, while the reality may be different," labour minister Mallikarjun Kharge told ET.
When our internal auditors, account advisors and financial advisors have all warned us against making further investments, we will naturally go according to that, the minister added.
The EPFO put on hold its plans for further investments in the housing finance company last month after the fund's top policy making body, the Central Board of Trustees, decided that it should wait till inquiry into the bribe for loans scam was in progress.
EPFO's exposure to LICHF is about 454 crore and it can invest 392 crore more keeping within with the investment limit set by the government. The CBI had arrested LIC Housing Finance CEO Ramachandran Nair and seven senior bankers in November for allegedly colluding with real estate firms to sanction corporate loans without considering mandatory conditions for such approvals in addition to other irregularities.
The finance ministry, in a letter to the labour ministry last month, had said that LIC Housing Finance should be looked at as a company and not judged on the basis of individual misconduct. It argued that the company had received top rating (AAA) from credit rating agencies and was fully backed by government-owned insurance company LIC.
Rating agency had recently reaffirmed its highest rating on LIC HF's debt instruments, bank loans, commercial papers and fixed deposit programme. Rating agency CARE , too, has upheld its 'AAA' rating of the company's debt instruments.c
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