The Employees Provident Fund Organisation (EPFO) is likely to appoint a concurrent auditor to examine if the investments made by its fund manager State Bank of India (SBI) have been at the optimal market rate. It is assumed that maximum returns will help the organisation offer a higher interest rate to its over four crore subscribers.
The proposal follows the EPFO?s claim that the country?s largest bank has not been handling the funds properly and parking the money in short-term deposits of its own which give less returns than those of other banks. It also says the bank has violated the rules set by the EPF board on investment in term-deposit receipts of SBI and other banks.
It?s noteworthy that SBI couldn?t manage to have a return of even 8% on a corpus of over Rs 1,60,000 crore for 2006-07. Earlier last year, the finance and investment committee of the EPF Central Board had suggested that an independent agency look into investments made by the bank.
The concurrent auditor will check the portfolio management by SBI every month over and above the annual audit. It will also scrutinise if interest and maturity proceeds are collected promptly and invested according to the provisions made in the Pattern of Investment. That apart, the auditor will see if all shares, securities, debentures and other investments are held in the name of the Central Board of Trustees, Employees? Provident Fund.
The meeting of the CBT, scheduled for Thursday, is expected to give approval for appointing a concurrent auditor. With elections round the corner, the CBT is likely to announce a 8.5% interest rate for the EPF for 2007-08, though the EPFO?s annual earnings are enough to sustain a payout rate of 8.25%. At 8.5%, the EPF will witness a deficit of Rs 263.78 crore.