EPFO to withhold any further investment in bonds of private companies

CBT announces various proposal at 225th meeting CBT held on 21 August 2019 at Hyderabad

The Central Board of Trustees (CBT) EPF in a meeting held at Hyderabad on 21 August 2019, approved the various proposals. In the matter of coupon default of IL&FS, the Board nominated three officers of Investment Division of EPFO to attend the Debenture - Holders' Meeting that may be held in future and if need be, vote on behalf of the Central Board, EPF.

Selection of ETF Manufacturers: The Board approved the decision to choose the Exchange Traded Fund (ETF) manufacturers through public bidding by 30/10/2019, extension of the term of the present ETF manufacturers (SBI MF and UTI MF) till then and also to authorized the Finance Investment & Audit Committee (FIAC) to conduct the exercise of choosing ETF manufacturers.

Allocation of investment in Nifty 50 and Sensex: The Board approved the proposal that the fund allocation between Nifty 50 and Sensex ETFs be divided evenly, i.e. in the ratio of 50% to 50%.

Appointment of a Consultant in addition to CRISIL: The Board approved the nomination of members from employer's and employee side in a Committee constituted to select and appoint a separate Agency/Consultant in addition to M/s. CRISIL limited, inter-alia to review the working of the Portfolio Managers (PMs), assist the investment Committee in redemption of ETFs, etc.

Appointment of Portfolio Managers for managing funds of Central Board, EPF: The Central Board approved Request for Proposal (RFP) document for appointment of Portfolio Managers and recommendation of the FIAC on appointment of Portfolio Managers.

Exercise of early redemption options available in DHFL Bonds: The Board approved for early redemption option in DHFL bonds recommended by FIAC.

Consent for Transfer of Non- Convertible Debentures (NCDs) of GSPC to GSIL: EPFO has total investment of Rs.2300 Cr in GSPC NCDs. The Board approved the transfer of NCDs of GSPC to GSIL, a wholly owned subsidiary of Govt. of Gujarat and a better rated company which had made an offer to take over debt of GSPC with budgetary support of Government of Gujarat

Legal Entity Identifier Code (LEI) for participation in non- derivative markets by EPFO: In Nov'18, the Reserve Bank Of India (RBI) issued advisory to all eligible market participants in the Financial Markets to obtain LEI Code. The Board approved the nomination of the EPFO Officers as the authorized Officials to obtain LEI Code.

Withholding Investments in bonds of private sector companies: The CBT approved the decision to withhold any further investment in Private Sector Companies Bonds and to compulsorily consider one of the two required ratings necessarily from CRISIL, CARE, ICRA & India Ratings for investments in PSU Bonds category.

The Board ratified the decision of put option in NCDs of Tamil Nadu Power Finance Corporation and also approved put option in bond issued Kerala Finance Corporation & Tamil Nadu Power Finance and Infrastructure Development Corporation.

Raghunathan, Employees' Representative on the Central Board, EPF appreciated the efforts of the Finance Investment & Audit Committee chaired by the Central Provident Fund Commissioner in finalizing the new Portfolio Managers for investing EPFO's corpus through a very transparent procedure. He further informed the Board that while SBI's Fund Management Arm has quoted 94% lesser than SBI PMS in the last mandate, UTI AMC has quoted 28% lesser. This would result in huge savings in portfolio management fees by EPFO.

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