State Bank of India among 24 public sector banks ineligible for Rs 50,000 crore EPFO investments-Economic Times
NEW DELHI: With non-performing assets on the rise, the country's largest bank —
State Bank of India along with 23 other government-owned banks, are no longer eligible for investments worth Rs 50,000 crore made in bank deposits each year by the Employees' Provident Fund Organisation, the country's largest retirement fund.
The Employees' Provident Fund Organisation (EPFO), which manages over Rs 6,00,000 crore of retirement savings entrusted to it mandatorily by 8.15 crore employees, can no longer invest in the bonds and deposit instruments of these banks as their bad loan levels have breached its internal
threshold to define 'safe' investments.
As many as 24 of the 29 public sector banks have net non-performing assets of over 2% of their net advances, disqualifying them from lucrative and predictable inflows from the PF department. These include large lenders like Punjab National Bank and the Union Bank of India.
"As per the investment guidelines for provident fund savings, the EPFO can now only invest in term deposits of five public sector banks — Bank of Baroda, Canara Bank, Syndicate Bank, Vijaya Bank and Bank of India," said a senior government official. "These five banks are not the biggest, but their bad loans are still below the the threshold limits set by the board," he said.
With the economy shrinking for two years running, coinciding with a sharp contraction in manufacturing and mining output, the spectre of bad loans has got worse across the banking sector in 2013-14, with 36 banks reporting gross NPAs of Rs 2,34,014 crore, 36% higher
than a year ago.
The surge in bad bank loans has become a headache for the EPFO which, till last year, had parked over Rs 1.5 lakh crore in public sector fina ..
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