Print Edition - 2015-08-12 | MONEY
Loan defaulters to be blacklisted
- epf act amendment bill
Aug 12, 2015-
A planned amendment to the Employees Provident Fund Act will allow the Employees Provident Fund (EPF) to blacklist loan defaulters and bar them from conducting any dealings with it for the next two years.
The EPF can declare persons or organisations as being blacklisted if they cause financial losses to it by not repaying loans or in other ways. This provision does not exist in the present act.
As the EPF has emerged as a big lender particularly to big projects including hydropower projects, the provision of blacklisting has been planned to be inserted in the proposed law.
The Bank and Financial Institution Act contains a provision for blacklisting defaulters. Krishna Prasad Acharya, administrator of the EPF, said they would form a separate working guideline to set the criteria for blacklisting loan defaulters.
“Defaulters of related subsectors like loans or contracts will be marked separately for the purpose,” he said. According to him, the EPF is unable at present to take any action against defaulters.
Similarly, the EPF will take action against officials who delay depositing their committed amounts with the EPF. “If the concerned institutions do not send the agreed amount of money to the EPF on time, it could penalize the institutions by making them pay interest for the period after the due date.
Similarly, it can recommend to the Commission for the Investigation of Abuse of Authority to take action against the concerned staff members of institutions which delay in submitting the amount,” states the amended EPF Act which awaits being passed by Parliament.
Among other provisions, employees in the informal sector and the self-employed can also benefit from the EPF’s services.
The existing act allows only employees of institutions in the organised sector employing at least 10 persons to
join the fund. The government has removed the condition requiring a minimum of 10 employees. The new law states that employees from organised institutions can join the fund.
If the amended act is endorsed, self-employed people can also deposit their contribution by fulfilling the necessary conditions. Similarly, migrant workers, domestic workers and workers in the agricultural sector will be eligible to join the EPF.
Acharya said they would form a separate regulation to fix the limit for self-employed people to join the EPF. Currently, the EPF accepts deposits only from registered organisations with the employee contributing 10 percent and the employer contributing 10 percent of the basic salary.
Likewise, the amended law will permit the EPF to invest in the shares of banks and financial institutions (BFIs). While doing so, the EPF can invest up to 25 percent of the issued capital of the concerned financial institution.
It will also be allowed to invest in consortiums of BFIs formed to fund big projects. It can establish mutual funds in coordination with its depositors. The EPF will also be able to provide loans to people by accepting fixed assets as collateral.
The new act will also open the door for the EPF to invest in hydropower and other infrastructure projects. Similarly, the EPF can set up a separate social security fund to operate social security plans like pension funds and medical insurance, among others.
Published: 12-08-2015 12:50