As the country’s largest financial institution with a wealth of Rs 346 billion, Employees Provident Fund has been running various schemes for its 600,000 customers. Earlier, the government had decided not to allow EPF to receive new registration of provident fund from the private sector, but some banks and financial intuitions and the private sector in general are not happy with the government’s decision and have been lobbying to revoke that decision. Against this backdrop, The Himalayan Times caught up with Tulasi Prasad Gautam, administrator of EPF, to know more about the issue and other investment issues. Excerpts:
What is the current status of EPF?
We are currently upgrading our services in line with the expansion of our principal amount, which is satisfactory. As we are the largest financial institution of the country, with portfolio of Rs 346 billion, we are divesting our investment in different sectors and searching for new sectors for investment. At present, we are providing Rs 190 billion in loans to the contributors. Currently, we are undertaking a massive management improvement of the institution, and our existing property such as house and land. We are constructing new offices across the country, which are expected to be completed within three years. Recently, we have established a housing company named ‘Sanchayakarta Aawas Company’ to provide housing facility to all the depositors who need such facility. From the beginning of the ongoing fiscal year, the government has allowed us to provide pension fund to the contributors based on their contribution. Now we are a major and strong stakeholder that can provide social security as well as pension to the contributors. For the purpose, we are now focusing on upgrading and restructuring our existing information technology services to modernise them, where the contributors will be able to avail all the services through their smart devices. After the upgradation of our IT service is completed, all the services will be connected with the online banking system. It will minimise the banking transaction cost, time and hassles for the customers. Moreover, since last fiscal year, we have been providing a new facility to our customers by linking our services with various insurance firms. This new ‘compensation scheme’ makes it possible for policyholders to claim their insurance from our branches and offices.
The government has recently decided not to allow EPF to receive new registration of provident fund from the private sector. What is your take on this?
After the government introduced the Social Security Act and as per the request of the Ministry of Labour, Employment and Social Security (MoLESS), we have temporarily halted the registration of new applicants for the provident fund. The nature of EPF and SSF is different in the sense that while ours is an optional scheme, that of the SSF is mandatory for all private sector firms. But the mandatory provision has resulted in some technical issues, such as repayment of loans taken by some depositors, who have now migrated to the SSF as per the government’s direction. Consequently, some of them are no longer paying back the loan and interest accrued to us. The Social Security Act also lacks any provision related to this issue. So, this matter needs to be settled as soon as possible. While we have held some discussions with the concerned stakeholders, no concrete decision has been made so far. Likewise, banks and financial institutions (BFIs) and some private sector companies have expressed interest to continue taking our service. However, as per the understanding between concerned stakeholders, including Ministry of Finance, MoLESS, SSF, BFIs, Citizen Investment Trust (CIT), among others, EPF will manage the provident fund and pension for the government employees, CIT will manage self-employed, and private and personal depositors, while SSF will manage the entire private sector.
However, SSF has said entire private sector, including BFIs should mandatorily join its scheme, failing which it will take necessary action against such firms. What is your opinion on this?
Apart from being the largest financial institution in the country, I believe we are capable of providing all social securityrelated services. But as I mentioned earlier, we have currently halted new registration from the private sector following the government’s direction. Wh