| The Central Board of Trustees of the Employees Provident Fund Organisation (EPFO) authorised Labour Minister Sahib Singh Verma to negotiate the interest rate to be paid to the organisation by the Industrial Finance Corporation (IFCI).
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| The EPFO has already agreed, in principle, to reschedule the payments due to it from IFCI over a ten-year period. Dues up to 2001-02 have been cleared, and the industrial finance company will have to pay the coupon rate on dues in 2002-03.
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| “I have been asked to negotiate with IFCI,” Verma told reporters after the board of trustees’ meeting today. The minister said he would keep a member each from the employers’ and employees’ side for the negotiations with IFCI. The negotiations will start as soon as the modalities for the formation of the committee are over.
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| The CBT is of the view that if the EPFO has to pay over 9 per cent to the subscribers, IFCI should add 0.5 per cent interest to the rate payable and pay that amount to the EPFO, said officials. For the remaining securities, a 9 per cent coupon rate was acceptable.
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| The negotiation comes in the wake of IFCI saying it will be able to pay only 9 per cent interest this financial year onwards. The CBT had, however, in its meeting, endorsed the view that the Delhi-based term institution, in which the EPFO had over Rs 1,000 crore exposure, should pay 10 per cent for the next 10 years, starting this year. IFCI, in a statement, had said it offered nine per cent interest to EPFO and other retirement funds even though that was much higher than the present market rate.
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| “As part of the restructuring scheme, we have offered reset interest of 9 per cent to the EPFO and other retirement funds along with extension of maturity, as recommended by Mckinsey,” IFCI said last week.
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| The EPFO has also decided to set up a fact-finding team to investigate frauds worth about Rs 1 crore in claims settlement across the country. “A fact-finding committee has been appointed, which will look into how and why it happened,” Verma told reporters after the CBT meeting. |
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