The Central Board of Trustees (CBT) of the Employees’ Provident Fund Organisation (EPFO) is likely to firm up a plan to exit from downgraded securities at its meeting in Guwahati during March 11-12. A standard operating procedure (SOP) will be put in place under the plan.
EPFO had, as on September 2021, investments of Rs 11,000-crore in securities which were downgraded by different rating agencies between September 2018 and February 2020. These investments were made between 2010 and 2017.
Ahead of the last CBT meeting held in November 2021, the EPFO informed the members that IL&FS and Reliance Capital also defaulted on paying principal and interest obligations totalling Rs 868 crore, as on September this year.
The EPFO held securities worth Rs 574.73 crore in IL&FS, but the company under resolution, defaulted on paying Rs 384.12 crore as principal and interest till September this year. Its Rs 2,500-crore exposure in Reliance Capital was a bigger worry for the EPFO. As on September 2021, Reliance Capital defaulted on paying interest and principal, amounting Rs 484 crore.
EPFO acquired bonds worth Rs 4,300 issued by Yes Bank between December 2015 and October 2017. The retirement fund body bought securities worth Rs 1,873.84 crore issued by IDFC First Bank between July 2010 and May 2015. In Indiabulls Housing, EPFO had a total exposure of Rs 1,600 crore as on September last year.
However, there had been no default till then on the part of Yes Bank, IDFC First Bank and Indiabulls Housing Finance.
There was, however, another instance of default in the case of DHFL. EPFO had holding worth Rs 1,162 crore in it, as on August 31, 2021. The NBFC defaulted on Rs 600 crore on principal payment and Rs 160 crore as interest payment till August last year.
Meanwhile, DHFL went through a corporate insolvency resolution process and as per the resolution plan, EPFO received, as on September 29, 2021, Rs 249.25 crore in cash and securities with a face value of Rs 299.45 crore.
“Total amount invested (in DHFL) but not received, as on September 30, 2021, is Rs 613.07 crore and the amount of interest due but not received is Rs 160.39 crore,” EPFO had said.
