":)

EMPLOYEES' PROVIDENT FUND CfGANISATIONNEW DELHI ..

...'

99th . '. Meeting of the, !

FINANCE AND INVE$TMENTCOMMITTEE. '

. -'-[C,.ENTRALBOARD OF TRUSTEES, EMPLOYEES' ,ROVIDENT FUND]

on i

28/07/2010 at 11.00 Af"M., I

VENUE:

. Conference Hall, 3rd, Floor,EPFO Headquarters,,.Bhavishya Nidhi Bhawan,14, Bhikaiji Cama Place,

~ew Delhi-110 066.I,

,

I,;

Committee held on 28.07.2010

The 99th

meeting of the Finance and Investment Committee, Ce'lltraJ Board of Trustees,Employees' Provident Fund was held at 11.00 A.M on)uly 28,.2010, i'!l the::eo ;;.", •3rd floor, EPFOHead Office, New Delhi. . .;.

(a) The following were present in the meeting:

1 Shri S. Chatterjee Chairman, FinanceCentral Provident Fund \.;UIllllm:;:SlUJUer

Head Office.2. Shri Chaman Kumar Vice Chairman, Finance and Investment '-'" ••~,'u

AS & F of Labour and3. Shri S K Verma Director (Social Security), Ministry

Govetnment of India. . ...4. Dr. G. .Sanjeeva Member,CBT,EPF (Employees' Representative)

. Reddy

5. Shri A D Nagpal

6. Shri B NRai

7. Dr. Ram S. Tameja ,

Shri Sharad Patil8

9 Shri Abhay Kr. FA & CA.O, EPFQan4,~S>i}i!l~L(~Singh

(b) The following also attended:1. Shri K L Goyal, RPFC -I lIMC)2 Shri RK.Stngh, RPFC -I (F&A)3. Shri V. Shyam Sunder Director (Audit),~tt.i'f~~nt4. Shri V'Ranganath, RPFC -II (Investment)5. Dr. AK.Singh, RPFC-II (WSU)6. Shri Rajiv Bisht, RPFC-II (IMC)7. Shri Rambir, RPFC-II (!MC)8. Ms Nidhi Singh, RPFC -II (WC) .',.

. . ··'.,f 'i1¥~<t.~:C"¥I? :J.

Shri Santosh Saraf could not attend the meeting and had sought leave of absence.

The Chairman welcomed all the members and officers presentinvite(j. F~&CAO, EPFOto introduce the agenda for the meeting.'" , ....,. ~: ...,.~...;.-~:.'e;- -to r .~_.; tt i"

'C ';",_ "

~ \.~/ _r -;' i A ,t c~1r~t~;~~t'~t.t~.Item 1:Confirmation of the Minutes of 97th Meeting of the ,Financear1d

..•. held on 01.12.2009 at EPFOHQ,i! .'Pi,~j.·,,,,, .'.,.,,'"" ,,,,',,.,,,,,

. were unanimously approved by rnE!mlt>er'S~'''n

...Item 3: Appointment of a consultant for Selec.tionof;;'!~~~~:~'~~alu~ti~n:tRegarding. .. ; ~ ;cp l<t":if!~l

FA & CAO introduced the item saying that the term of the present ~~~~·~~~l~~;~1t:jl~~~~~~~\..'scheduled to expire in the month of September 2010. Presently they are

EPFO in performance Evaluation of the Fund Managers. However since the term of the Fund

Managers is scheduled to expire in March 2011, there is a Q~.!~};9initlate

appointment of the new Fund Managers, Thus, it wastwo assignments, to assist EPFOin- './; i) Appointment of the new Fund Managers amt

ii) Performance Appraisal of the Fund Managerst;Jit· jk'!. . , . . ' . #: l:;,:j~" .....:As.JFA), MoL&E, Sh Chaman Kumar enquired about ~heprOcedure

occasion of the selection of Fund Managers and whether the Finance & Inv,••ctimi:il,

was involved in the same. Further, he also queried as to the rationale for engagementof.onlythe Credit Rating Agencies (CRAs) as a Consultant. • " .

FA & CAO proposed the constitution of a three member committeeofficers of EPFOto carry out the exercise of selection of consultant.

FA & CAO informed that it was the same procedure as envisaged nrF'C;:PllT1V

materially involved in the whole process. As regards the of .. ,

explained that they being involved in the business of~{~;')1:''''''''''\fri!t~~.;r;;entities), are repository of the relevant information about u.,~•.•.and the Borrowers. Further, they are also engaged in the portfotio evalu

. Mutual Fund industry. This makes them the most suitable op '01) for the'~l~~w~n.~ ,;.;}' v., . . . h .~. . ". .,J,; .. ,... . "~-''SOme members felt the need for lncorporating'the cntert . urni: ~-,,<.,"";,-~~,,>. ~:' . -' ., ,-,l oi:. ~-'''fpto become eligible for the job. ' .

i~J';f{>I

.,~" ;;

some members suggested that th~~ornpO:i~I~~n!~lril~1inmM.ninclude the representatives of the Employers and J:;n:IDlc)vf!!es;

Itwas' decided to recommend the proposal to the

The Proposal

• 1-' .•. • '.;~ .._.: .,f-, ..

The,~RA~registered with SE8I and havlna minimum ten: " " ' ,{lji',i

India!lmay,be"lnvtted under, the, GFR;: prov,Jslon~".~,'Gfl':"L"'i1I~IIR~JmManagers as well as their performance evaluation.;,ruu'tnrrn::ll,n,. •• ,evillu;ltiClIflwill be for three years su~lect

~I1WlqI,()fI perl~icat ~lt~rf~I!Y'1

The item was approved.

The FA&CAOput up the above agenda item which, proposes,Accounts upto the balance of Rs. 5001-; stopping of crediting the inteAccounts with the balance of Rs. 50,000/- and above; while leaving the Inoperative Accountswith the balance between Rs. SOOand Rs. 50,000/- as it is, subject to futhis regard. ", '

2~ Participating in the discussion, Dr. G.S. Reddy \AI::InT ••'"

in all Inoperative Accounts, regardless of their bahigher rate of interest.

r;~.s:at(lIS freezing, ?lInC,)P~J1Uy~g~iP.,w~unanimity among the members of theCommittee may recommend stopping of crediting the interest in all lnooeratlv ••accounts which were to be frozen should be left for the decision of the can'1\10.1Nagpalalso held the same view. However, they added that-in genuine cases the interest should becredited when a member comes for final settlement. On this, the FA&CAOobserved that incase the database of aUthe members would have to bQmai(l~ined and n9could be frozen. This will not help reconciling the act,,~,~liil~(~loa4 ..,with this and stated that both the things cannot be carried togeth~rasproblem. f{

4. The members representing employees further recommended that thisbefore next CBTand they would come up with some solution after having

';"~;"'i';.,.th~ Trade Unions. t " -i t:--:t:' ..... ... ./,..t~. ,;-"~\;,,,,\,. , .~ ,\ ..·1 "',.

Item

.,~.

6: Performance of the Portfollo Managers of EPFO ":'Regarding.The item contained the details about the performance of the Portfolio M;ln;!laAlrlli:

end of each quarter during the period since September2008tiU JUrle;'\lU;1.1... ..'.benchmark yields.

of if;,~:.zm .Some members enquired about the composition 'of the bench

that it assumesuniform cashflow and investment pa:ttelrn.t1~QUI~()U~:i::. ~ , ,,,, '-' '-,' ··c '- " 1 --' , "':.

Yields In.different asset classesprescrib.edin the",l' 'the performance of different Fund Mana~ers against th~ ib.~.n~m~rkJev~I~;

investment strategies adopted by them," in terms of timingof-classesand quantum and yields captured by them. Since the prescribed nVf~!lITrnp.n "~TT, ••rn

;.<1<"''.liw,Yrequired to be achieved by the end of a year, it provides the individualflexibility to strategise their investments in different assetclassesas per their'the interest rate movements, liquidity adjustments, supply of GovtBonds,etc.

The members desired that CRISILmay make a detailed nr"'CI>I'11t-::atlnn

evaluation otthe Fund Managers before the next C~.1 i

It was foHowed by the individual presentations by eachof the Portfolio. . "

AMC, ICICIPrudential AMC& RelianceCapital AML.SBI was asked to explain the reasons for underperforming the nM<.rnlTl

quarters in the FY 2009-10. SBI admitted that their Investment view durin,:tli-Ift.astray which adversely affected their performance. However, during the FYinvestment strategy paid off well and they recoveredbenchmark level.

All the Fund'>Wrpade~~~~q~iilin..tain the present yield.

,;:t _.' t

. ~.;Themeeting ended with vote o/thanks to the Cha;r'-:~;~;f4:+'

--:: :

)

EMPLOYEES' PROVIDENT FUND ORGA~S~TlON

AGENDA BOOK

99th Meeting of the Finance & InvestmentCommlttee, tDT, EPF

Date: 2~.()7-;.2010 . INDEX OF ITEMS Tfme: 111'00AM

'.

ItemNo.

1.

PageNo.

Agenda

Confirmation of the. Minutes of 98tn Meeting of the Finance ar,dInvestment .. Committee held on 26.02.2010 at· EPFO 3-8Headquarter, New Delhi i,

I

2. Action Taken Report on the recommendations of the .~Ih " _'7.?Finance and Investment Committee I J':>"':>

I

3. Appointment of a Consultant for Selection of Fund Manage$ 3q~·.-""'Q;and·their Performance Evaluation. i ~(J

5. Any other item with the permission of the chair

3j-lJI4. IncludingBrickwork as an approved Credit Rating Agency

1

rr:

.'-)rr-(

c:C .~lo

(

(

('

(

(

rr

r :

.t_

Item No.1: Confirmation .of the Minutes of 98th Meeting of the-Finance and JnvestmentCommittee'ih~ldon 26.02.2010at EPFOHeadquarter New Delhi. -. - -

Minutes of 98th Finance and Investment Commitf~e me~ting held on26.02.2010 was cfrculated vide letter No. Invest.111(98~/FICI2010/1292-13571

dated 08.04.2010. No comments have been received on the minutes of the aboveI .

said meeting. Copy of the minutes is enclosed as Annexure -A, (Page NO.~~to 8).

Minutesmay be taken as confirmed.

II-l

. !

(

rt:r(

cr'rccr

Final Minutes of the ,98thMeeting of the Finance !& InvestmentCommittee held on 26.02.2010 .

. • !

The 98th meeting of the Finance and lnvestmentCommntee, Central Board of

Trustees, Employees' Provident Fund was held at 11.00 A.M on Fe~ruary 26,. .

2010, in the Conference Room, 3rd floor; EPFO Head Office, New Delhi.

(a) The foJlowing were present in the meeting:

1 Shri .• Chaman Chairman, Finance and Investment Committee, CBT, EPF, and

KumarAS & FA, Ministry of Labour and EmplQyment, Government ofIndia.

2. Shri S K Verma Director (Social Security), Ministry of Labour and Employment,Government of India.

3. Shri A D Nagpal Member, (Employees', Representative)

4. Shri B N Rai : Member,.(EmploY,ees' Representative) - - -

5. Shri Ram Tameja Member, (Employers' Representative)

6. Shri Sharad Patil Member, (Employers' Representanve)i I

7. Shri Abhay Kr. FA & CAO, EPFO and Convener

Singh

(b) The following were also present in the meeting:1. Shri K L Goyal, RPFC -J (IMC)2. Shri R.K.Singh, RPFC -I (F&A)3. Shri V.Ranganath, RPFC .;.11 (Investment)4. Shri Rajiv Bisht. RPFC-II (IMC)5. Ms Nidhi Singh, RPFC -JI (IMC)6. Shri a K Mishra, RPFC-II (IMC)

Finance & Investment Committee members nameJy, Shri $antosh Saraf andI

Shri G Sanjeeva Reddy could not attend the meeting.I'I

At the outset FA & CAO,EPFO, introduced the new Chairman to the• I

Committee and. welcomed him. The distinguished services: rendered by Sh.I

Rakesh Jain, JS & FA (Labour) and the outgoing Chairman of FIC, was

appreciated and taken on record. He then expressed grief over the unfortunate

demise of the CaT member and Ex- FIC member Shri W.R.yaradarajan and two

minutes silence was observed as a mark of respect to the depart~d soul.

3

r(" ;-)r('

(

rI

r'·

The Chairman welcomed aU the members and officers present in the

meeting' and invited FA&CAO to introduce the agenda for the meeting.\,

......

Item 1: Confirmation of the Minutes of 9.7thMe'eting of the Finance andInvestment Committee held on 01.12.2009 at EPFO I1Q, New Delhi .

The minutes were unanimously approved by aUthe members. '

Item ~: Statement on the Actions Taken on the Recommendations of the FIC

The Committee took note of the Action Taken Report.

Item 3: Recommendation of rate of interest to be credited to the EPF members'accounts for the y~ar 2()10·11.

FA & CAOintroduced the agenda item stating that asper the estimates drawn,

, for the next Financial Year, we can offer the maximum rate of 8.5% o~ the EPF during

the year 2010-11. Chairman enquired about the basis and method of calculating the

r~te of interest. Other members also desired to know the workings in greater detail.

The efforts of the Investment Monitoring Cell (IMC) of EPFO for effective-and

vigilant monitoring and their proactive approach' in pre-empting' the issues and '

ensuring optimum returns on the Investments of EPF, despite the general depressed

economic environment, were lauded by Sh. Sharad Patil. Sh. A.D. Nagpal and Sh.

B.N. Rai.

FA&GAO explained that as per the provisions contained in the' EPF Scheme

1954, CST decides, based on the recommendations of FIC, the EPF rate of interest

for a particular Financial Year well before the commencement of the relevant Financial

Year. For the purpose, estimates of the interest payment liability and income in apartiyular year are prepared based ,on the Holdings (Corpus) as on a particular date in

the previous Financial Year and estimated c;;ontributions to and withdrawals from the

Fund in the next Financial Year. Further, asSumptions are made regarding the,

reinvestment rates in <f~erent investment classes in the relevant Financial Year and

the projections are drawn for the liability and income of the Fund in the next year.

•

(

(-)

r'r

r,

r'

. . .The Chairman and Shri Sharad Patil observed that the present system involved

many assumptions and estimates which could be avoided if we declare the rate of

interest at the end of. a Financial Year, When the actual figures of income are

available, rather than before a FinanCial Year as per practice at present. Chairman

enquired if it was a feasible option.

. FA&CAO explained that the present system lakes care of the rrfembers who

leave the Fund during the currency of a Financial Year. In case, rate of interest is

declared at the end of Financial Year, it would lead to difficulties in seHling the claims

of such outgoing members.

Members enquired if in the previous years the actual income and expenditure

from EPF matched with the estimates and in case of deviations how the difference

was adjusted- It was desired that the actuals for the past two - three years may be

compared with the estimates drawn for those periods and factual position placed

before the FIC with details of adjustments, as carried out in those years. FA & CAD

replied that though we can know the actual income, it is the actuaf liability that too, on

account of arrears contributions, which is not workable. And for any valid comparison,

both the income as well as the liability is needed.

While the employers' representatives agreed to the proposal for the EPF rate of

8.5% employees' representatives had a reservanon that it may be further raised to

maintain the level of 9.5%.

Shri Ram Tameja said that FIC cannot recommend more than what it eams on

the investments. While on the one hand Govemment is not willing to provide any

subsidy, on the other hand CST has not been adopting the revised Pattern of

investment which is prescribed by the Ministry of Finance. To- seek any further

increase in the EPF rate, there ls no recourse, he observed, but to decide about the

new pattern which would provide some additional avenues for deployment of Funds in'

instruments of higher yield.

Dr. Tameja. further stated. that the Item to adopt revised pattern of

Investment Guidelines by the' Ministry of Finance be reconsldered in the next

meeting. He urged the Trustees to agree to follow the guidelines of Govt. of :

India.

5

»<,

)•.....

.-'-',

.--.It was decidedto recommend the proposed rateof 8.5~ for the year 2010-

11, to the CST while ta/c.ing· note of the concern Qf the employees'

representativeS to raise it to 9.5"-

Item 4: Non-receipt .of perfOff'lCa.finterest and redem~tion .proceeds of.Rlchardson &. Cruddaa Ltd12.5.0% unsecuredmon-eonverttbleredeemable bonds issued' by Mis. Richardson & ~ruddas Ltd (RCL);.Regarding.

The Committeeobserved that in '1he COD meeting hel<1on 24th November

2009, it was represented by Mis Richardson & Cruddasthat the), are in the process

of negotiating withMis,SBI for workingout a solution to the EPFO claims. The COD

had decided that Mis Richardson & Cruddasand Ee.EO can come back after-

considering anyfresh submissions byRCUEPFO with S81. .

Accordingly,the Committeefelt that since the CODhas left open the matter for

its re-considerationin case MIs. Richardson& CruddasLtd did not settle the issue as

per EPFQ's originaldemand, it would be premature to dispose of the matter of FIelevel. The matter may be placed before the COD for an appropriate

decision/guidance.

Item 5: CBT, EPF- Deletion of delayed period interest entries below Rs~1000/-generated by 581 system up to 30.09.200~. .

The itemwas approved.

Item 6: Relaxation in investment guidelines for investments in.Private Sector

Bonds. .FA and CAO informed the members tha~.the current guidelines restrict

exposure in'privatesector to banks only and the Corporatesin the private sector are

out of its purview. Presently, only two companies are eligiblewhere specific approvatof CST Was obtained, whereas there are many private companies whose

creditworthiness is very.high and we can safely investmentour Funds in them and .~ .

obtain better retums.. It would be advisable to widen our investment basket, with-in'

the given patternso as to eam better'returns on our Funds.

6

)

Shri AD Nagpal, while appreciating the concern for higher rsfurn on investment,

said that increasing the exposure in private. sector and particularly the corporales may

...., entail considerable risk of default also. Chainnan explained that, return and risk are

inter- related; every investment has some risk associated with it However, we may

devise our own strategy in a manner which protects our interest while ensuring a

reasonable return also on the investment.

. Director (SS) sought clarification as to whether the companies' listed in the

agenda only were proposed to become eligible. It was ctarified that the list was onlV

illustrative. A company which satisfies th~ stated conditions would become eligible for

investment. It was further clarified that it would not be practical to draw any

comprehensive list of eligible companies since they would keep Changing depending

on performance of the companies themselves and the ratings assigned to them by the.

agencies.

The item was approved with the modification that only such Private

companies would be eligible for making investment undertliis categpry where

a minimumot 26% of the shares are held, individually or jointly, by any PSU(s)/

Central Government or State Government and the company·has AAA rating for

its Bonds by two credit rating agencies.

Item 7: Quarterly R~view of the performance of the Portfolio Managers for the. quarter ending as on 31.12.2009. '

The Committee took note of the performance of different Fund Managers and

expressed concern over the performance of those who could not meet the Benchmark.

level. The Committee desired that such concerns be conveyed to the Fund Managers

in clear terms.

Item 8: Dropping past cases of penalty on belated credits.

II,~;i

ShnA.D. Nagpal painted out that the item had already been taken up in the

previous meetings of the FIC and there were certain directiOns of the Committee>

which were to be acted upon by the Office. Theiterri was ptaced in the Agenda of'

todays meeting, he observed, without making any reference to such previous

deliberations and directions.

-, His COncern was noted for future compliance. FIC was further informed that as

per its directions, the matter was taken up with'various RPFCs-1 in the field offices totry and recover the money from the defaulting companies falling in their jurisdictions.

However, despne repeated reminders no response was forthcoming from the RPFCs

-possibly because recovery througJ,tthis means was not legally enforceahle and was

being attempted as a matter of convention.

The committee desired that before taking any decision on,the matter, response

maybe sought fro-m the concerned RPFCs. The item was thus deferred.. '

Item 9: Two years tenure of' eng~gement of the Portfolio Managers to erid

on 31.03.2011.-,

-The Committee feK that it was absofutely logical and prudent to consider -the

tenure of the Portfolio Managers on the 'Financial Year basis. The item was approved.

Sh. A.D. Nagpal cautioned that it may beformalised through CST meeting well in

advance before completion of tenure.

Item 10: Changes in the Existing Guidelines for increasing the exposure limitsfor PSU/PSFUPSB investments.-

The item was approved.

Item 11: Multibanking arrangement for collection of EPF dues,,

The item was approved.

The meeting ended with vote of thanks to the Chair.·-i ..

(

crt:

r·r ..r:~.

f' "

Item.No 2: .Statement on the actions taken onthe recommendations ofthe 98th 'Finance & Investment Committee.

,...Ref: .Subje~t· Decision Action Taken

Item: No.3' of Recommendation of It was decided to recommend The. item was placed in98th FlC' held rate of interest to be . the proposed rate of 8'.5% for the: ..189th- meeting of .on credited to the EPF the year 2010-11, to the CST CBT,EPF held on26;02.2010 members accounts while. taking note of the. 09.04.2010 for approval.

. for the year 2010- concern of the employees' ~2011 . representatives to raise it to

9.5%:

" Item' No.4 of Non-receipt of98th FIC held periodical intereston and redemption.26.02.2010 proceeds of

Richardson &Cruddas Ltd 12.SOOk

It was decided that the mattermay be placed before theCOD for an appropriatedecisionl guidanceagain .

unsecured non- ..

convertibleredeemable bondsissued by MIs.Richardson &Cruddas Ltd (RCL)-Regarding.

The case has beenreferred to C.O.D. , fortheir re-consideration.

Item No.5 of CBT, EPF - The Item was approved98th FIC held Deletion ofon .delayed period26.02.2010 interest entries

below Rs. 1000/-generated by S81system up to30.09.2009.

Item No.6 of Relaxation in98th FIC held investment guidelineson for investments in26.02.2010 Private Sector Bonds

The item was approved .withthe modification that only such.Private companies would beeHgible for making investmentunder this category where aminimum of 26% of the sharesare held, individuallyor jointly,by . any PSU (s)/ CentralGovernment or StateGovernment (s) , and the

The item was approvedby the 1Sgth CST;EPFheld on 09.04.2010.

Necessary directionissued to SSI, Mumbaivide letter No.:Invest.111/(141)/Defaulter109IPlI dated07.07.2010. ~\('1nnexure~B.Jl~'.'-9 'S.. '

The matter was placedbefore the .189th meetingof CBT held On09.04.2010 and wasawroved. The decisionof CBT· wascommunicated to theFund Managers throughe-maHon 11.05.2010.

(

crcr-c·r'('"

r_C

.J

r'l '

. Item No.7 of98th FIC heldon26.02.2010

RPFCs . have beenrequested to fIX a timeframe within which therecoveries would becompleted. The agendawould be re-introduced tothe' FIC once a fullevaluation is done anacommunicated by' theconcernedfield offices.

company has dual AM ratingfor its bondsThe Committee took· note ofthe performance' of differentFund Ma~agers and expressedconcern over the. dismafperformance of tnose whOcould not meetthe Benchmiuk:leveL The Committee desiredthat such concerns beconveyed to the FundManagers in cfear terms

Quarterly Review ofthe performance ofthe PortfotioManagers for thequarter ending on31.12.2009.

EPFO's concerns wereclearly conveyed to thelow performing FundManQgerS in theQuarterly- PerformanceRev~ Meeting held withthem.

Item No.8 of Dropping past cases'98th Ftc held of penalty on belatedon' .credits.,26.02.2010

Committee desired that beforetaking any decision on thematter, response may besought from the concernedRPFCs.

Necessary directionalre~ Issued to theRPFCs concerned videletter No. Invest.111(141}1Defaulter/2009111030-11041 dated28.06.2010, followingwhich action have been

. initiated by theconcerned RPFCs - theirresponses are placed atAnnexure-~c.J ..~() . .to V.·.3.3- ....

- .-..... . ..

Item No.9 of98th FIe heldon26.02.2010

The item was thus deferred.

Two years tenure of The Committee felt that is wasengagement of the absolutely logical and prudentPortfolio Managers to· to consider the tenure of theend on 31.03.2011 Portfolio Managers. on the

.Financial Year basis, The itemwas approved. Sh~A.D. Nagpalcautioned that .it may beformalized through CBTmeeting wef! in advancebefore completion of tenure.

To initiate the process ofsetecting the new FundManagers, the itemregarding Appoinbnent OfConsultant for the sameis put up at S. No.3

/;.0

rcrc(

Cctccc(

(

t) "

Item No.10 of Change in the The Item" was approved for i 189th "CBT approved the98th FIG held Existing Guidelines recommending to "the CBT. i item.on for increasing the26.02.201o

exposure limits. forPSU/PSfI/PSSinvestments

rl

r

J 1

cr

••rr"r'rrc(

(

(

S~U1)PasJ

., .... ------=::::::

mdt~M~(1,lI1f.i!~~. 'lmfm!m

I

EMPLQYEES~ PROYIDENTfUND QRCiANISATION. I.

(Ministry of Labour & EmplOyment, ~ of India). .lj8IJ~ I Head Offlc~ .

~*~.I4-~l(;(qf~. ~~110 066.

Bhavishya Nidhl Bhawan, 14, Bhikaiji Cama Pla¢e, New Delhi - 110066.. .

No: Inv~t I/l(141)IDefaulterI09~5 y'To '. \~

Date: 07-07-2010

ri7-~ ?~1n. JUt.. 'UI'i,1

The Deputy General Manager,State Bank of India,Securities Services Branch,2nd Floor, Mumbai Main Branch Building,Mumbai Samachar Marg,Mumbai-400 001

Sub:- . CBT EPF - Deletion of delayed period interest entri~s below Rs. 1000/-Generated by the system upto 30.9.2009.

Sir,

I am to invite a reference to your letter no. SSBIPMSINEKl007435 dated20.10.2009 on the above-cited subject,

Your advice pertaining to the list of 1326 entries of delayed period interest uptoRs. 1000/- aggregating to~. 1,87,736.00 was considered by the 98th *C, CBT meeting held on26-02-2010, and was approved. Accordingly, you are hereby advised to delete the entries andensure that such system-generated entries donot occur in future. .

Yours faithfully,~ +-.(K.L. GOYAL)

REGIONALP.F. COMMISSIONER-I

t:r

~ ..-

r () Y

c: Telegram: tlKEND,~IYANIDHI' New Delhi. Fax No. 26194349

rr..G:('!

r

EMPLOYEES' PROVID£NT.FUND ORGANISATION. - . .

(Ministry of labour & fJi!p1oym~nt,Govt. of~c,iiaf ~!, !,-'-:',: "He.itd Office .' ";~. , ' :'

Shavishya N,idlliBhaw;;I'n, 14,B~ikaiiiQma Pla€e,New Delhl-11006S.- .- "'. I' ".

, ' . q~No. Irwest.l/(141)/pefauJter /2009/4'" r

, /,,\.To

URGEr:«

- Datep:...OG3uly, 2010

t·~:,~ - gT-f~f ZOlfl!-_r... '- JUL v... '

, ,The Regional Provident Fund Commissioner ";,;' ':,:,Delhi (North), Shirnla, Nagpur, Pune, Ghandigarh, Mumbai (Bandra)t:' .:;.'-'\':~~:"'"!.': ';':~ <I i'; ,.' l

j .

Subject: Recov~ry of overdue interest on.belated credits on E:PFOdDYi~;~!Uil;nr,~,r~;.~:~;;::tregardmg: . i-,r "1',.,,:,,;' .,'

Reference: Reminders issued by letters of even nos. dated 28.8:2009, 7.10.2009, '9_10.2009,23.11.2009,28.06.2010 and Q1.07.2010.

Sir, ' .:. ..L •• :

With reference to the context cited above I ern directed to invite a reterencetoour' communication, referred to above and the subsequent reminders' rs~ued'thereafter. It is unfortunate to s,ee that there has been no feedback on the actionthat has been taken by your office on the issue. The Finance and InvestmentCommittee of CBT,EPF has taken a serious not~ that there 'hasbeen no reportfromyour office on the action that has been requested for.

The next meeting of the Finance and Investment Committee is scheduled for26th July, 2010 and the action taken by each of the fteld offices is to be apprised.Accordingly it is requested 'that an immediate feedback in the matter may be givenby return fax. '

~IONAL PROVIDENT FUND

-,-., ..

13

(i"(,

r/(L '((~ '~~-'

, .'/ {':., . " ..•.:\~.;..

S;-.1\.~~ ~'~8 ;;':'.-:;.;':,;'~.:,;:;,'

EMPLOYEES· PROVIDENT'FUND ORGANISA110N;':j', .Head Office, Bhavisbya.Nidhi Bhawan, ' . ·1 :".; lj

14"Bbikaji CamaPlaec,New neJhl-ilOO66..'. ..•... .

-,

To, .

Sub:

Sir.

Please refer to this' office letter ;':'no":InWtJI1 '.(141)/Pefaultef/200919J44.934S} d~4 .,23-l,b2009(Copy>encldi~)·~o.n~'ihe.~:above cited subject: .. ' . ....' ..... '~~=r~~=~~~,"~~~~~ift:l~:~'

.' : f.:

. : .:.

"7

" ,.t'.";,

1'-/':- ...•. "'.!'

5()Nt~)\J~) .c.:>

..'.;"

..'." .. . .:>. . . '.:':!f.!F '~~$~li';;~";~1:~'(;'"• . The' }5sUepertains to Investment of EPFO Fun'd~in the vad$·u~.::<~.fJ,tF~I}~!}Cvr{{~'

,. state PubllF Sector Undertaklng~ .. Tp.~$.tQteB~pk;qfJndla aSltl:le .P0Jt~1 .:1 ·~pag~r!J.. for .:the Cantral BOard of Trustresi :~PF:~~!JnC1~!~S':PMtofi~ qef~\11Ji. . ::firo&l!it~F;'. practl~,esl used to keep ~ .cl~$f;!.r~~~~:gVtal!~!!t,~;OJP!l{~:that~f3~m~,dueip.I;.;:.eiCl;n;,'EPF on account of Interest. or reg~mpJIR9fig,lJl(:.~~q~r~ndlne?cha.J1'd\~y;. 'I~i;i~p.e::ofdelay used to lodge claims for Icharglngpenalty .fromthe ·IS!iiu~~4()~. - ~~@Fed...credits @2 percentage points over and above the. coupon rate of the··. ~p'ectivesecurity.' .

.~.'

• ,. I

However,lt has been seen that the Issuers nardly ackno .default on their part and oesistedrrcrn pay(ng~\JP .. this hplarg'e number of cases where the claln; has been'rnade by 561.recovery. I "_'..:.. I.' ",·.;.,_.-",..c ..• ,.,

• 1 .. " .. " '., _. ! .;~. ~. : .

It is In this context lette~~were'lssued:o~ 28~08-2009 Ireminders. dated 7-10~200~ & ~-tO:,2P.O~.~~.~..~..rn.a.~~r9f .not. .be lega lIy enrorceapte .. ' ~~~ there}~r~ ·'~~f1:a{~~e.?tablwhere delay in payment of Inter~f~(In.cJpal.(I.re~ubj~c~d toIn view of this fact, theconcerned establishments may ·be· •.•.•.•I..•••U ..I'"' ••••~ ••••.dues. : '. . .

FINANelII

I

. ~'.,-

.•...•

15;

I•

(

r

i,

.,

Ii ; I ~";:1m '1'.'i~J!\11E~Ploy~e~~~!III;;~(Minis,try .r:~~

D1uvishh

-:rt:

; ,..I '

. /I

~'-

'1lil1}'?f~~~$r~; :,1", .'.~~ ·1!'~·.;·.·f ;:d~~:1?1i~~t\:-~.j

•

,;/,tFi'i1F -1 t:·.:

!

I'

i-j .,

1 am directed to. invite a •.••f'Pr ••"'I' .••.August and. i" October 2009 on tllC~;~~~j~~~:~H~~~9i'J~J~~received, it has been directed by

'.,meeting held on 81b October.~.~. ' f· ", lbt'schc:duled to be held on 24. VClO[>Cr1'm::~r'~ .. : ..n ::li..I~ is accordingly' requested;:Pf~nlation in the ¢nsui;ng,&~_,,,,..~O&,_

! '1,~di!nctob~r :::009 in New Dl:lhi.

I,

". ! i

(

jlL~ ~h-\o-20cr\SI.'d)(~()'~.·___ •• ,'''' '. l.~

<b~~,~~~,~~~i,t;:...'pl<i?/' h. ••··;~:et;:~I·;:1 . ,. V"' ~~!,'. (-.~;::;+

EMPLOYEES' P~<?VIDEN'l:,~IDmORGAl'fISA TION. (.fJl1f;TfiIvNt.1IY' 1j=;Jf}cl?/, W'«f 'H'lCbN)' .

, .;. (Mfnistry Qfl,.al>Q~r.·QoVtof.Jndia) :'~.L .: , .•, ~Jbfll I (H~d Office) , . '~ '1.~31o~,2~~;

~. ~ ''llCA, 14, "4fcfjfGft q;J7f£ t<ffl, ,oft ~ - 1!1()()66 YBh(3vts.hyaNidhi Bhawan,14, Bhikaijf Cams Place, New Delhl-110 0'66.

NO.• I~Vest.I/( 141)IDefa utter/200r: [ IqJ~ ~ IQl~'.~~.L~4P09~~ .. ,~~!;'~'To . . . ,; ,:' l', ·:{t'f, ~~n:ff~;~ • . i';': '.

•• ,,' I. ';, '. :j =>~J1-~;~~hfl.i.f;l:~\~.t~,~? "~;1 li.i'.H;'

. The Regional providpnt Fund COh)mlsslo~er-I . '\'" • ':b · 1:'Ct:3..,..p..\..l~e.JNo.A¥\A'( ~ ~ ~~k\-vv. \".1~ ~'M- W ./

~~~:.T., .. R~~~~~~~t~ ;[tfeX~~~ "',Investment - reg! . t ., . '-'. ':f L

.1 ,~. i/; s.rt,i]~ ::f· .;. i .. - t,,'h/f ·d. '.I" Please refer to thlsofftce letter opf ey~n number d~ted28th 'Augustf2009

I, j"'l,~j'ji~®TjJ,efA&CJ\O,EPFO on the subject clted_boye, .' . i .' ,d:,;,,< ••...•..I " :il~':·'·r:'·!'.,';'!;. - . In this connection] .I~, m~y.,!>~.ldtPl'I'~.that t~t~i~~i;i~.~Mti~!H?!'r~..!~..·iU.·;h.1l..·!.'·fr:::t.l;.i; sch.·~d.Uledto' be heldon ~thd:tQberi./2QQ'9.~At~.~·~.:'.·r.n.'.-.:g.fy~.tltis~re'qo.~~.·.e.'.s.;it.e.·:·.:.d.";.:i.·.~.h~.:'t....:t...r ..h..·.,e.r:.l.n..'..·p..'.:.•.u.•·..t:· .'~'1" ' , ".' . I . II " .... ' tl'~... !.,. -'" " . . l'···· i",t;, ". , .... '.·:tt ":" fj-OrPi!~~ur side on the rhattei ipa~ ki~diy;t~~~pr6~idedSincelt ,i~H~~SJdt~Bf~n~~"'th~'. ·,ll' i ,..'. ., , • . " .' .'j[ i : . Finance & Investment Committee may need tobe apprised of th:e same;An~earIYiC3Fti9p,.i;''6,;i·r I., ..•. , ",' . ....'... .';!!~j,t, ~y ~:: ofT personal attention is requested t..e; nrtlltfj~.U;t.

,I ,

!" '~ .

j'

. ,:

.' ,., RegiOl)a'.~()\fid~nt··:I¥;~:;'Hii.~iijf-k~~h"'{-,~f;'

. ~.

'.• ,!

.: .:_ •....r

II

1i

I,I:

-.:.... '

CH$f:qIq): lifc)~ Mt1~Jld~EMPLOYEES' PROVIDENT ·FUNI)ORGANISATION

(.IJI1T & :(tV/Iff"( Jf?lt""" Wffl 'H'?¢J'()(Ministry of Labour, Govt. ofIndia)

~'Lc41~4 / (Head Office)~ f.1fu 1fCFf, 14, ~ (f}TllJ ~, ~ ~ - 110066

Bhavishya Nidhi Bhawan, 14,Bhikaiji Cama Place, New Delhi - 110006.

.«:»: >~tNo. Invst.ll(141)/Defaulter/200~. r ~o' Dated: - l 8 ~~";. 2009

.. T /v-...)o ,.The R~gion.1 Provide nt F"'nd Cornmtssloner-I" , .. . . ~}(}, ) J 1"\...k: _t (!..G~~ ~\AiI\c:.. rH~J,~.~, ~",~-yr.S~ ;Sh\w.~ QJ.~.~ ~

/ (!\~ C\}J ~llyLC~~b~J ~ \\0. ..Sub:- Recov~ of Over ue' Interest on belated credits on EPFO

Investment - reg.

,

~·N~.\<)~]55\~)

SPEED post

The issue pertains to investment of EPFO Funds in the various Central aoc State-

Public Sector Undertakings. The State-Bank ofIndia as the Portfolio Managers for the'

Central Board of Trustees, EPFFunds, as part of its default management practices, used

to keep a close watch on all the monies that became due to the CBT, EPFon account of

inrerest or redemption proceeds and' in each and every case of delay used to lodge

claims for charging penalty from the Issuers for such belated credits @2 percentage

points over and above the coupon rate of the respective security.

However, it has been seen that the Issuers hardly acknowledged delay as a

default on their 'Part and desisted from paying up. This has led to piling up: of a targe

ru. mo er 0 cases ':vh2<~ th,'" daim has beer. made by Sol but there has been no

recovery.

The matter was considered by the Fina nce & investment Committee in their 95th

Meeting held on 18.8.2009¥ The Finance and Investment Committee while deliberating

on the issue have peen of the opinion that qenuine efforts for reallzlnq these dues are to

be made at the level of the Regional Provident Fund Cornrnlsstoners of the respective

regions by way of persuasion and utilizing their 900dWill.// '",.

fS L?~,._J " •• ' .~ ..:"',

r/'l.. '('1~";"...,\..".""!'C:~ .;'" .~, ':;...~ ..••~""i"''\ '. . \ • .':" \. t

/

"---,I(I

;'

-." ..... '" _.__.' _~7l ~l

detailsof such cases-~?lIingu~der your jurtsdktlon is a~ unde;;-t(

(

(

AmountreceivedBer~tedly

of

-,

Rate ofpenalty(CQuponRatePlu~

-.-- t,· - ••......) i

\ .--:"-_ •• _ .,i-J

Amount of PeriodPenalty (in DelayRs.)

Accordingly, you are requested to take action as SUggested by the Finance &

U investment Cornrnittee, CBTtEPF. A report wlthtn a fortnight shall be appractated.

Yours faithfully,

(Abhay Ku r SinFinancialA;~isor& ChiefAccountii r.

\L-- 0

~i~-\SS\Jt-D

..

. i'

11

(

rc:rr('

r

.:.~".~l_~·t\~~-I~·~t.}:~!.~:.;.;.:i--'f'-'!·~"£.::.=~~{_ ··.;~t~~:!~~.~~:-~::1..'

tC

c(

" . ','

"gMP LOYEES' PRO.YIOkNT'FtiN~o:oR.OA.N ",,,,,~c,•.,;&)~:>;,{~,

(Minisirrypf tallour~Govt~pf:,ri~iq)'··.."",'''''':,~,""',~,R~GI()N.~t9~f~f~,s;~~J!L~·;l,f~;~.),j., . ,'~,.,:~gei~

SECTOR-17D, CHANDlGMit-'160017• ~_-. -, ' •• ' "i ." :

, ~.

(l

r

Kihdfy :e.~erto your office !;tter no. In'vst. 11(1~~)/.Dlif~'ult{ir/2009j'. ..". ~.."" .

Invst.l/(14.i)/Defaulter/2009 dated 06/07/2QfO"z.q'i[;,~~',,~;,'J:~!

(

rr

(

r

ElVIPL'O YEES Ie PROVID.ENT FUNO'ORG~ ··~·~~;~~ttlON::..:.~:l. . . .{MiJ;l~~r\t"pf.U19q;~f1GOvt'brir;~i~f"",..:::f:r;!j:;:;f~":;';'d.

. iR~GION~lOfFfCE.S.C.O.\ 4-1, . ,:'. i;llfS.ECTOR-170 GIiANj)IGARW~6aoi7,·~"i1;!i;l'~;J .

---..-.-.----.--~'" ',,:,- f1c~~*~;t~l';,+,~"Rif Mh' Balance Sheet ~~n/ , J ,~", 'f!.~J'~i('?ff~i~

F~x :27.2]

Ph; 27

f . . t:.f

'\ ..•).,.. ;~ •. .i •. :.:, ';"': ,.c-:, ',> ~',,t,{;;~.;,··t<~...;X?';;>l"'\'.'~;~~\:·}i'::'''':;~::·':;'f:·¥.:~}A!vY6~·.may be aware that EPfO has madl?irivestrnel)t

l~l\:,;;~A~~';~~;'~¥J;:i~""~IH'S;'.~~.WV~I.IP'·.The Intere~r re'c~'iv4d:'b#;~\lt#;'fA~~~t~tNtKt~~~:.

It is therefore; requested to kli)dly release the.alTlount of. n\1t:,rrlt,"'".,. -~. ': .~. . - . ,

'. :'~..

'. -;." ,......•

~-. . . '.'.

\

Copy to: :, . ".;. "

~;,<'~'l;'?i'1?~;"~''i''~ -;';h;~KL Govai,; RP s.c '!iJIIM~I'~~~~!:ffi';'~;:~Q.lhi~'I"'~'W~r"PIfi~rl~tl~;.P;l>IrwH IIp In l.T;::r.;;iil' ~r'2.in ,/ ('\(i',;\/ll ,!Jtr.;llHlif,:::{ i il - f'1i~H.'l'ji1,f()1111i.H10lI

;:: '.hi> ,~ vi.I> 1\.I~ '\ili I. (.dlll'\. I.lid ;\.1./1 (' P I ( (l'L S, III' $IIJle~), CI)i.ll)(fll;dfll •.. ItH krndIII!orrn,IIHIIl

.. '.~1'..':... ".1--

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

(

rr(.

(1

('

r(

(

(

(

( ". Dear Sir,

-~.~_'M*,~~'~~~~i.~IF'·' 1;:':""'1 W :;,~·:i;'t~4f~1.~~i~~~F.'_~H~1.' ·::·;3.,Further, GIIO h~hon6LJreq their obnoancn

amount, the prospect of recovery of delayed period 'intere~t amo~ntpYnJingOnti~:.sUif-. '. ' .' . - .. -. "'-'" .

'isbleak considering, cost of filing the suit, follow-up the case, non~aVailqbilitY;:ofsecurity

...CENTRAL ,BOARD OF TRU"STeES EMPLOYEES'PROVIO.ENT;FUNd'tbBTEPF¥:·'\·~·)·I rii!7;'~fE~~~~~~~Ci~~~:~~5~i~~~~~v~~~~~6~~,~i~~}~~ch'~"~»"''';5W~;.,d;;;~eIh;Itl/le delayed p",;ridin;r;;~~elt!"$L. '.Rs.94,490/,: WaS' claimed frorn GUp OR acqQqflt:~q,f'0'1ela'\leo··,m,"'·~II'It

(

(

(

4.ln view of the above. we have marked qff the deJayed'narH"" interest entries, as perannexure enclosed. from the system/report.

(

( .').r

(

c( L ;;.,

( -( I(

f(

~;,~l'"t;·

and possibilities of the claim 9,etting time barred etc.

that lodging of the claim and follow-up of suit shall nci~

_.f ."

f Ii.

fii'i

i' ?-.l,:...- lc.::',-_,DY. GENEARL MANAGER

End : as above

(C ,),,--=.>/ ....... ~

: -\. "

.. ;.....

.'~rec5dtf~~fi1'fBlrre(t'i'6pfn{&n'. any destredresult

~.'. -.. ,;, ~:- .....

. \

"""" .. ;.

r:i[SXI\\.

lovestment Corporation Llmite~ ';~ "j.~~...-.•.~.,,~

III.:

;-T4isJihas:reference.'to JOu".~t~~ .no.:.~~~!RM~~(,::·.~~lt~r~~ 2~~I'k,~gp~slIlig,iJq(..,, pa.YJll¢ntof penal interest on delayed receipt 'of penodiCal!inr~fesft~tjlril~to~¢~~'of,;;:;,;SLRbOnds. . '. > .' .. ~,:,. ~":;.:;{Jii,;~:,,~.,s4~~~~·":~~;;;~'~"''';~r'.

In this regard, it may.please be noted that the cheques were issued by the COfporationon->, ~r7b~f~.re.. diie?~te.·of m~tudtY~~f.th....f!..due date,ofpa)~~~nt~?ri~t.'i~r:~t.~Ho....,.."-';w.' .• ~~v.e....r.'.if..t..h.er~is..delay in transit , the Corporation can not be·heldtesponslI11e.~~~r~h.iolHU~M'in.ot'required to pay any interest/penal interest,' ,,' .

It may also please be noted here that in GIIC P.F.Trust also, wedo.notreceive any. interest for delay in transit period; ..

Thanking You,

-.: -. :!.;}: .

C.C.TO:

'..'. ".

. -. ;~.

I / cen.tr~. boo ard o~ T. rustees ~mpI~Y.ees' Provident FundV Securitites Services Branch, Main Branch Bldg. •

. Mumbai Samachar Marg, Fort, Mumbai-'400001 .\" ... -,

~:i·"st:l;f.~.;~~':t7i'i""¥.~;.,~~.

A. Government of Gujarat Enterprise

ij

,R:2cisteted &. Iicad err ..C~ : iUdyog Bhavan, 6th Floor, .Block No. .: & /1

I Seeor-I}, GandhiM,gar-3X2 'ill. (C,..;'·"'';' '~'f'

'. rl?hope:(079.)2);l.49MI-44f';;x :~'l1·7'I·n,!/ I"f~+~N;/t~t:~~&tlSt~:~\l;llri'~i:!::~:.',

I •

l~..!t71I ~_J

·:., .'/-"'1 .' -.~- .~~.

,".1 .

.~ . .

.GUJ'ARAT IND~ INV. CORPTORA. TION LTD._Q.VE~bUEINTERfST ON ACCOUNT OF DelAYED RECEIPT OF INTEREST

",:;' .

::~.ANNExuRE

A~ount ill Runnas-,( "1.~

.---_.,-,':~

. I i '; '. 1- .

.OVERDUE

D"EDAf ~10OF I INTEREST@SECCD P.l.RTICUlARS OF SECURITY FACE VALUE COUPONAMT. RECDO"; DAYS 2.00% OVERI I DELAY/ REEGULAR

I COUPONI I I j."rr:-I

"

oi0044 1L..5V-~ .3J cac 2007 100,000,000.00 12 500 OOO~OOr6-Jan-2005 10-Jan~200s 4 ~";; .:1~,86~510044 12.5-8%· GJ GIIC 2co7 100 SOO000.00 11 736 47i.00I13·0ec-2GO-S 14-0&-2005 1 4,662...•~'TOTAL ,

I ... "~4,S25•...-...,

I -,OVERDUE INTF=.~ST ON ACCOUNT OF DELAYED RECEIPT OF MATURITY

24,525

39,925

64,450

. . . '. I( .. JU;.. ,,n:A'1

ASSISTANT P.FGQt1JtlJSSIONE~ (E ". ~V,/j!h:#i'!ii,Fh',:I!!!":"

~~~ :Head Office, New Delhi for information. This has ~ referEmc~ to •.•"'':,,,,.....•Office letter dtd. 28/8/09/07/10/09/09/10/09 & 25/11/09 in this repard.(2) The Assistant P.f cerrunrssfoner.icash) lor information. This ha~a eT~re')<:'E;!!!'~O'Mj~Jhis U.O dated 21/12/09 in this regard. 'L' , J --' •

(3) Sh. S.Halder, E.D alongwith the H.D letter No. 14516 dtd. 28/8/p9 alongwi.th'all··; ..annexures'related to interest ciaim for belated transfer amounts on EPFO,~~:f)Llii,~HAv;:1J,;~.<r:..Investment in r/o the different authorities and H.O letter No. '9349 ~td. 25/fi/OQ'~':;',~".':.:"..for information with the direction to persuade the above-mentioned ~utho!t!ie,~f~r -.-s.: ....

depostttnq over-due interest on belated credits on EPFOlnv~tment in faV;~F~f1'~;tj~t,~~~~~--.'r C5T,EPF and submit the report of the same to the undersigned at thi earliey;t. " " .' ". 'c"

r~ .:»: . .,.//~~~~iv.-::-./n!1.rI)OI.~'('( -: c-...~9.' \. \"1-' ASSISTANT P.F COMMISSIONER fEXEMPTED) , . 1":~~~'~')\0\ .' .\ ., .

~A~VP ~'/\ll<.~-2fJ 0~· c X\~7

c:("

1

rli

("

r/'.

C t.

( I' ".C!rC

': ;-',";;;'.-

\

.j.'

;. . . .' .'~ .:~;~:lEMPL?":EES' PROVIDENT t:.U~D ORGANISA!IO~

(MInistry of Labour, Government of lndl~) \RegionalOffice, Kolkata

D:( BLOCKI SECTOR-lI, SALT LAKE crrv,• j(OlKATA~ 100 Q21,

No. A/SPl/Securify/Ex/C.C-VI/INF/WBI .f 1: \ ~ ..l~ ~~ed:

ToThe W.B Infrastructure Development Anance Corpn ... Kolkata-700001.

Sub: Recovery of Over due Interest on belated tredits on E ...Investment --~ Rega~ding.:\ .•.. .». ... ',.<;' :1··.··· .

~_~~,...--- ",,~=__=_=o_ .•. -- .:. __ "'M _1~G .

Please refer to this office letter No. A/SPl/Security/Ex/C.dtd. 05/11/09 on the aforesaid subject.

The Provident Fund amount investment made with you nrrl~nI17:::1.ti

to time but the redemption has not been made In due time. The netansenclosed herewith. . . .. .>

. In view of the above, you are again requested to deposit an a~u ..Rs.2,59,804/- as per interest claim forbetated transfer amount as . Icuannex~res to the Central Board of Trustees, Employees' P~OVi~t.nt...f'!dimrnedtatety. . ";' ?V':''';l 1 .. · •.. ··.

,. . .. I· ',<~ -:''::. - . I -.

:' -'Y~.. Ii

End: As above.

1,..

II

~ .i ./!

put the: redem'ptton has notenc:;lo!:;eo herewith. '

;-ftJ1~;\Ihv',e"vof the above, you cu'e . reIQlJJesJ;eQ:~to8,306/- as perir.teres~claim tor

:'••.•·I1 •."' .•••.<ki.'"'.;> to the.Central Poard 9t I{l'~~J!~~fi,~~~l~~~. ~.

'" '~'"r:

. \

~.-

Regional Provident Fund Commissioner (Investment),'Employees' Provi dentFundOrganisation,Ministry of Labour & Employment,"Government of India,

, - ..>.-,.~

Bhsvishya Nidhi Bhawan,I 14, Bhikaji Kama Place,

New Delhi 110066

.., .

-.", ': ,"

Dear Sir,

Hindustan Cables Ltd. (BCL)

Non-payment of delayed period interest

This is to advise that BeL bonds were received asthe coupon payments and maturity proceeds werereceived

'···t

Our Security Services Branch, Mnmbai-had-taken:upthe period of delay, However, no response has been receive

3. HCL is a Central Government Undertaking. ;As such, ;up matter with them through Government. We;'offices and take up withHCL .throughperiod interest and advise us in the matter.

4. We request you to give priority to the matter.

'{ours fWthfuUy,

~Dy. Gei\eral Manager

.- .. ~-.:.

'le: (PlVIS & CS)

:~ .•'l)' .....

·;~011)

/

cc:r :.- ~.

.~~\~~~. 1~.·';··

epMtll:8 ~lffi6a f5Ita "TI'.-a-~'~

EMP..LOYEES' PROVIDENT 11'UND." •..•...."...•.'. (9fofi n5flCR1. 3JR(f·;~/Mi·njs'tH, oiLa-hour

i'.

. .~)'>fk.l-,~RJ~/r~~~!on~J.9!fic.e.:.IJ2.~~.~·'~;c,~ 'Ol<lrl,' ~~i-:;"i

IJ2~A,Ridge Rond, 'RngJ11Jjl . '. '.' '.

'!,.-~ -;:"':

(,

( .r~p<~.pW':c:{)nunig$ici~~~!~·m;~;:...+ .,EFf· ." ,...<sation, 1•14·~$hikaji9ama Place, i:~'N~lvD.eiJii':'(j,6.. t hi;IJI"}.~,: 'i;,!1;f.;r of .-~ --1- •••";.,,.,,.-.•...

. . '. ,i L..,. _'~i~,B(~;;(~!-~fjf.:!. ..'" .",$U8:,;Recovery. of'0verdlb·thtinterest;on;,belated

--inv'(:lstmen t:-fegc" . . ....•••• ,.

Sir,

Ki.l,lq reference is invited .tothe letterarefer'cited.

In . the' light of. letter' dtd.28.6.20tO anddtd. 23.11,2009 received with that, I have takenExecutive Director; Vidarbha,.:.Jrrjgn'C9rpo~ation(VIDC),Nagpur .and .·:$.x:cC1)tive..b~rector,

;.#~:~li(~~~49H~',pevelopm~nL i<(;QFpgratipn{(' - .dtd. 1.7.2010(copies enclosed), as ino earliersreference'this matter,

rrrr:

c

c

(

'f i'.;~:~t~'~l~",

. (.

····3,0.··

(

}~:.

(

( Q5fJfilIt}' 'lFcnxT 'f6rt'h.PROVli)EN¥'Ft}j~i6'oJi1a~l~f..c4:Wtjlo(

(

(

(

(

1

Development Corpn., ., , t ;',: ". .: ',:,t ~\~~.;,.~J:l'·"!~r~~<"~".>"~. ..~;.:~;~~~(~5~~tL;:':F,fi~~tJ:·';

::~J'J~!:'~~~'~~fyor~v~~'dG~iriterett~id~~ikjit~d/~it·7.~:21~.ait·. int~rest;red~mptioQ.proce~cls;..:.:.:>' .["

. cr . '. -: - ":

(

, As'peB~tlie<)ii1r6i'mation 'conveyed loLmeb· y··the;'~~mt)lQyeles;

Organi~t1on, Head Office,"{:!' :·'t".';': -, ~.~~:~,: ..p'>'~'~:.~~:-> - •• -. • .-:U?,'- -., .

."''''''_'''~.lie·~a.l\agers:{or the·C~.ntral "'''''~~'''''"''~'.I.. of ·the~on? IFjn~tl1cial

" ".

.... , .• "i.J

(

('

t,

(S.ub: Recovery of overdue interest on belated credits on

, Reg.

......

I'r:

""" ~;:~'-..--~C '•..••••.••'T,

EMPLOYEES' PROVIDENT FUND ORGANISATION( Ministry of Labour, Govt. ofJ1KJ.~J\, ,REGIONAL OffICE :MUMBAI ~:F~~"",,.',-'-'

Bhavishya Nidhi Bhavan, 341, Bandra f Ea$t-),~'Mqm9ai,..,..

(

r(

c(

No·MH/PF/CashRecon./ i/3

,narrWJo: To, , K~L The Central P.F.Commissioner

ErT'!ptoyees' p~F.OrganisattonHead Office,New Delhi., ,

Kindlyrefer to your letter No.lnvest.1.(141)Defaulter/2009 datedO~.i; ,"recovery ofoverdue interest on belated credits on the'~PFqtn\l'D"'l'f'n."..n+ •.'

The matter was followed up with M/s.M~ha~~htra State,Corporation, M urnbai - 400 03G ~ M/s.Maharashtra Jeevan PMumbai - 400031 through the~E.O. It has, beenre~~(j t~~t

dhikaranhas taken up the matter with the FA,CAp,rl:>i~inr'Drf'the needful, The details of overdue amount on

r.IT'W:otrn ~The matter will be followed up at our level: r!~llijl~niH~~!f:,EiJg~~eeV(lnPradhikaran remit the overdue amount at the A;:t11IP'cr

, As regards. the overdue amount payable by MSRDC,itheShri Jatin Desai was contacted. tie shall be writing to us-on payment of '.'9t 2% in a.couple of days. We are pursuing the matter with the above,revert.

( P.REGIONAL P.F.CO

-: '\£f~R~!P.t'M,~.;.',•.~.:.,:,i",."~,p.•.,,.•,.,;,r,o:,,/.B.",'1,lrr",' -,' . .-~~?\~:

".~'

[iIi

II

oi,Jl7J ;mr~/J !Regional Office

(£4:cr~.~ '{l~ld,,",·:·. \. .. :

\,... '

. EMPLOYEES' .PROVIDl:NT FUND ORGAN./SATION·~-P:IC'<i ~~. lTffil mtm' .

lVijnistry of Labour & Employment, Govl of India~ -;to 34, ~O~Ol!"o~. ~i fuJR;rr-171Q09. (~mro) .

Blnr.i< N" 14· i !?, II !=Ioor. SOA Cornntex, KasumntiJShimla-9 tH. R)'... :

. ;/'.

RO/HP /6599/Comp/Ltq:a') Regd.

To,

II

IIIIIII:,~.~

rII,

II.

t

er Infrastructureent Corpn. Ltd.,

ew Hirnrus Building, CircularRoad,Shimla-l71QOl

SUbject: Recovery of overdue interest on belated credits on EPFOInvestment regarding.

Sir,

It is Intimated by Sti1tf' Bank of India, Murnbai that M/s H.P. Road & Other InfrastructureDevelopment Corporation Ltd., has not" yet pald theoverdue interest amounting to Rs-47n94,.?$ (Rs-Four Lacs Seventy one hundred and ninet; four and Paise Eighty.Nine only) whrch~i.s'tla~.fhe1r~ytSt'ai~~·

Bank of India; Securities Services Branch, Mumbai.

IIIIIIt·.}!J".,.- .~; $

You are .therefore requested to pay the above. overdue interest to 581, Murnbaiimmediately under intimation to this office,\} .

~~fr9;~fiGq~ Copy to: . . .'.' .

\~.: Sh.' MaheSh. Kumar( APFq, ~O, Shim.la: with request to visit thees;t. w. ith thiS.·.le.'" ..•.r...a.:n..d.,.....s....o.....,...Itq\ ') out the matter. . .; ':'(';>'C\'

~. 2.Ah. K.l. Goyal,. RPFC(I MC),.EPFO, '"'.ead ..Qu.a.f.tersl New. DeJhi~with re~e~e.ncet(j le'tteJ'ho~~: .'\...../ Jnvest.l/(1411Defa.ulter/2:009/11D30c41 dated:28/6/10,...,.for intorrnatlon. . .

':.;: ..'o:.:"'::t*':,.-:x-1M~~'~-

Yours faithfully,

.~\, r(P,K,AGARWAL)

';REGIONAL pj:: COMMISSIONER"I

)

Item No 3: Appointment of a Consultant for Selection of FundManagers and their Performance Evaluation

1. The Central Board of trustees, EPF had appointed the following four fund

managers for managing the corpus of EPFQ in a special meeting held on 29.07.2008: .

(i) HSSC AMC

(ii)SS/

(iii) Reliance Capital AML

(iv) ICICI·Pruder'ltial AMC

The fund managers were initially appointed for a period of two years with effect

from 17-09-200?. The tenure of the fund man~gers was subsequently extended to

31.03.2011 by the CST in its 189th Meeting of held on 09-04-2010 (see Annexure-I) .:

Consequently, the process of selection of new porttolio managers who will manage

the·EPFO funds from 01-04-2011 must commence in right earnest.

2. The selection of fund managers entailed the following steps:

1. Issuance of Expression of Interest (EOI) package

2. Receipt of EOls from bidders

3. EOI evaluation and short-listing of bidders to receive Request tor

Proposals (RFPs)

4. Issuance of RFPs

5. Pre-bid conference + clarifications provided to bidder queries

6. Receipt of Proposals from bidders

7. Evaluation of Proposals

a. Technical Bid Evaluation

b. Financial Bid Evaluation

8. Discussion of the evaluation at Finance Investment Committee (FIC)

9. Discussion and approval of evaluation at the Central Board df

Trustees (CST)

(

rr- ,')

rc:C'

(

(

(

(

(

(

( -("

(

3. The CST, in its 1815t meeting held on 24.01.2008, had adopted a policy

decision to take outside assistance for the selection of" portfolio managers and their

performance evaluation through a dynamic and customised performance benchmark

based on regular professional inputs on market related data (see Annexure-II); The

existing fund managers were shortlisted with the help of a credit rating agency (CRA)

CRISIL which was involved in the process of inviting Expression of Interest (EOI) and -

detailed analysis of technical bids submitted by fund managers. CRISIL was also

mandated to assist EPFO in evaluating the performance of fund managers.

4. Both the process of short listing of fund managers and their performance

evaluation have been quite satisfactory (see Annexure-II). Given the experience of

the past, and in view of the cnticality of the investment of EPF monies forsecunnq an

optimal yield on the EPF Corpus, it is proposed that the same system may continue.

As such, it is proposed that Credit Rating Agencies (CRAs) registered with SESI may

be invited under the GFR provisions to assist EPFO in the selection of fund managers

as well as their performance evaluation. This time it is proposed that the tenure of the

consultant for performance evaluation will be for three years subject."to satisfactio~ of

-the quality of services rendere~drawn on periodical review. further, a three-member

committee consisting of officers from EPFO is propo~ed lor the purpose of carrying

out the exercise of selection of consultant.

The item is placed before the Finance & Investment Committee for

consideration and recommending the proposal contained in Para 4 to the

CBT,EPF for approval.

35

rrrC~rrr(

(

c(

(

(

(

(

(

c

_ b-

. . . :~;:,:'I:11;f;Item No.3: ~"~'-,lUB,,';r!Hng: Arrangement for collection Qf.EP:foit!tt'~;

: :T ;"",;:#;\~,

,.. "

Decision: 'Tlle noard g~~P!Q~~Q.tlpPointrnent ora COn~~I~()ntaspropo~~ ;l~*~l~c0;~nda who wii/ give detailed feasibility report on multi-oonking

{:r"'i'1'";\J':~il(TtS, guide on tt:'C!111{)!ogy options and the prQC~ss\t;iiiid

r2'~~_;ilC,iii2tionoptions, with the observation that the Report of,theCG:.sL;jj:cnt would be placed before the Board for final '":''''''''''1:"\'''''

rr:atte:",.:

Iter., :;"Ic. ,3: ,\·:-:.;,-,;{;]tlor~ in Investr"nent Guidelines for in'IAc::f'

Fr!,!;?teSeci:orBonds.

f.X\.'Cit2 companles having 26% shares heid by ~,e ..Go':l:./St'3ti: Govt .. and having dual N:tA'

cOLside:ed for investment in ti-Jeirbonds.

~f,·;f~'~"·;.,,;;;:,:~?e'sin the EXisting'Guidelines for inCrf.:asirigttJlJt~tis~~;..''''-''-:;''-:<~j!''v ¥im~:"-s "'or f,;)CUup. S.fT·'Ps·n,ll1vestments· .''." <....•.. , ..... ,-' - , ~.... • .•• t..:: ~ ,;.;:}',.... A., ~ v , .... _,

-:!1~~i;i"OPOS('l! contained in the memorandum was 2PR[9_Y~~tby

the Board after brief discussion, for adoption of 1RDAexP9SUr!3. .,< .... - i4,:L·, ,

flotn:S of 10% of the capita/employed or 60% networtNp,OJh,e

Itcfn No.6:.. ..'~.~:;t f'ff~~~)t:'~

Two y·e;:u's . te'nu:e of engagemel1t"Qf;·~tb~,,'~..', . 1'0. . .4 , s,••• '<. !l.1;~lE" , ,'.

M<Hir';ger.s to be extended upt031.03.1..01l~,c ,,;.t'.i.>' .,.;o.,:,,jj'

pel-fo~"l1anCe of. the .:fundinformation of }tll~89arcrt

managers,,' " .

-8-

3£

".,.

I'

/'

( , ..... ;, ..

(-. r)('-.-..C.

c

c(

(

(

(

(

( .

I.. J

Annexure-1I

Benchmark Composition

The performance of the portfolio Managers of EPFO is measured against a PerformanceBenchmark developed by CRlSIL in consultation with Investment Monitoring cell of EPFO.This performance benchmark is dynamic in nature and captures the daily yields of securitiesinwhich investment ofEPFO money is permissible as per our existing investment pattern andInvestment guidelines. It is a very important tool with which we are able to compare theperformance of our portfolio managers. It also serves as a reference point for both EPFO as

. well as for the four Portfolio managers, giving an indicative minimum yield Which couldhave been generated by investing in the prevailing market in the asset classes permissible asper extant Investment Pattern and Investment Guidelines.

The weightage given to different asset classes. in the construction of the benchmark is asfollows:

r------~~----------._-----------------.-.----Constituents and CompositionInvestment category

. .-------30% (l5yr, 20yr G-Secs and Oil bond in ratioof4:4:4:2)

-'GILTs

L--.---~--f-------.-------- ..--SDLs 15% (Taken at 50 bps higher than J 0 yr G-Sec

Benchmark}

.-~-----.------' -------.---~-+--~-----.------'----.----- ..-----------Corporate Bonds (PSU) . 43.75% (Which will include 1.25% for FDs)

with AAI.A and AA+ bonds in the ratio of2:1

1-0-. -.-------'----------.--------/-----,------.--. -----------.---------

Corporate Bg:MSEP_'9'_j-_\i,a,--t,--e)--'--~- ~-~'---l_lO_'X_O_(_T_ak_e..;.n_~ 25 bps over AAA PSU Bonds) ICBLO 1.25% (average rate for a day)

The benchmark is constructed on a daily basis with the yield to.maturity calculationscaptured from the eRISIL's corporate bond matrix.

ii\

\!I1IrIt

There are some securities in the above asset categories which are not traded on a daily basis.Therefore it becomes difficult to obtain their YTM and price on a daily basis. CRlSIL has aproprietary too] to price these securities and obtain their YTM on a daily basis. The mutualfund industry also has to take recourse to this proprietary tool for the valuation of their fixedincome portfolio.

-As a part of its continuous endeavour to provide an appropriate benchmark to compare theperformance of EPFO's portfolio managers, CRISIL review's the methodology for computingthe benchmark y-ieldon a periodic basis.

, 1

f"":Jr vc-r-r·rrr(

(

(

(

(

,~Annexure-JI.

I

Evaluation Methodology.The 'overall performance of the Portfolio Managers is evaluated on the basis of a compositescore on three parameters i.e.

I, Return (80% weight) .2. Average Maturity (10% weight)3. Asset Quality- . (10% weight)

However from EPFO's point of view it is the actualyieId generated which is the trueparameter for measuring the performance of the Portfolio Managers: This actual yieldperformance during 2009-10is presented as follows:

Yield Performance ~(1009-10)

Portfolio Quarter 1· Quarter 2 Quarter 3 Quarter 4Manager Yield Benchmark Yield Benchmark Yield Benchmark Yield Benchmark

% Yield % % Yiel4% % Yield % % Yield %HSBC 8.64% 7.28% 8.47% 7.41% 8.43% 8.13% 8.47% 8.17%AMC

_ .._- I-- ._-

RCAlVIL 8.40% 7.28% 8.40% 7.41% . 8.41% 8.13% 8.45% 8.17%8.11% --

ICICI 7.88% 7.28% 7.97% 7.41% 8:13% 8.2~1o 8.17%PRUAMC jSRI 6.51% 7.28% 1.38% 7.41% 7.69% 8.13% 8.04% 8.17%PMS-'-'--_.-._ .._- .----

38

2

(

r;:)r '-

rcc ..(

(

(

('

r:\

Item 4: Including Brickwork as an approved Credit Rating Agency

The Background

Credit rating is an independent assessment of the creditworthiness of a, borrower or bond issuer undertaken by a credit rating agency. It provides an opinion

on the relative degree of risk associated with timely payment of interest and principal

on a debt instrument. In India, there are four well known credit rating agencies, viz.,

Grisil, ICRA, CARE and Fitch. Crisil and ICRA have association with international

( rating agencies Standard and Poor's and Moody's respeCtively. Each agency has a

slightly different seale for rating, using A, Band C categories, with fine gradations of

each. The symbols used by different Credit Rating Agencies are presented .oetow;

Description (With regard to the Symbol (Rating category)

likelihood of meeting debt, ' CRISIL CARE ICRA FITCH

obligations on time)

CAREHighest Safety AM - LMA AM (ind)

AM,-

High Safety AA CAREM LAA M (ind)\

"

Adequate Safety A CARE A LA A.(ind)

CARE.Moderate Saf€1ty BBS LBBB BBB (ind)

BBB

Inadequate Safety 8B CARE BB L BB BB (iJid)

High Risk B CARE B' LB B (ind)

Substantial Risk C CARE C· LC C (ind)

Default 0 CARED LD o (ind)

Secunties with a rating of BBB~and above (on the Crisil's scale)' are considered

to be "investment grade", while those below are reckoned to be "speculative".

EPFO invests in fixed income instruments only and hence, it places a veri

high premium on the credit-worthiness of the issuers where investments are made, In

most of the cases, ratings equal to or more than AA only are accepted. In fact, credit

quality has been made en integral part of our performance evaluation (of portfolio

managers) methodology itself and carries 10% weight in overall scoring, which has

'yield' and 'maturity profile' as two more parameters.

, Present Guidelines concerning Credit Rating Agencies

The existing guidelines of EPFO are as under-

"Criteria for Credit Rati.ng Agencies ~-It is also proposed that the Rating Agency,

whose ratings would be utilised for making .investment declsions, should have

completed a minimum 10 years of operations in Indla".

As per the above guidelines, EPFO accepts credit rating done by only those

agencies that have already completed 10'years of service in India. The guidelines

were duly passed by the Central Board of Trustees in their .188th meeting· held on

05/1212009, Four credit rating agencies, viz., Crisil, IORA, CARE and Fitch qualify as

per the existing guidelines.

Representation byBrickwork

Brickwork is a relatively new company that started its operation in February 2008.

They have forwarded representations to the Ministry as well as to EPFO requesting

for relaxation of our investment guidelines that stlpulate that the credit rating agency

. whose services EPFO would be utilising for making investment decisions should have. . .

completed at least 10 years of service in India. As per their representation, they have

requested for change in guidelines due to the following:

.:.•They have obtained due approval from SESI to carryout credit rating business

in the country.

•:. As EPFO is one of the biggest investors in the fixed income category, EPFO's

guidelines have resulted in issuers avoiding credit rating by Brickworks, So

much so that it may result in closure of their operations. ..

L,L .)

.~,i~,

.:. Their systems' and processes fonow the best practices in the industry. They are

open for testing their methodologies and processes to remove any doubt

about their credit actions.

EPFO's Comments;

As explained earlier, the guidelines in question were framed as it was thought

proper that there should be some criteria to -unlize the credit rating by an approved

agency.

The representation from Brickwork may, however, be considered as the agency

has got due approvat from SEBI, which is the regulator of rating agencies in the

country; and EPFO does not want closure of an entity's business due to adverse

impact of its guidelines.

The Proposal

It Is thus proposed to replace the existing guidelines with the following:-

"Criteria for Credit Rati~g Agencies:- The rating agencies whose ratings can

be utilised for making Investment decisions, should have completed a minimum

10 years of operations in India. However, in cases where more than one rating

would be required, the second and or subsequent ratings can be taken from any

other SEBI approved Credit Rating Agency even though not having completed a

minimum tenure. of 10 years operations in India".

The Item is placed before the FIe for consideration and recommendation

to the CBT,EPF.

41