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Plea to cut interest on IFCI bonds rejected

By Our Staff Correspondent

NEW DELHI JUNE 27. The central board of trustees of the Employees Provident Fund Organisation (EPFO) today turned down the request of the Industrial Finance Corporation of India (IFCI) for a reduction in the rate of interest on bonds issued by it.

The board asked the IFCI to pay the same coupon rate fixed at the time of issuing the bonds. However, it reduced to 10 per cent the rate of interest for the next 10 years from April 1, 2003, applicable only if the outstanding dues of Rs. 30 crores were cleared at the earliest. The IFCI, which owes Rs 1,000 crores to the EPFO and close to Rs 4,000 crores to EPF subscribers, had sought reduction of interest rate from 13 per cent to 9 per cent, on the ground that interest rates had come down across the board. But, the only concession they got was an extension of loan by another 10 years and a reduction in interest rate to 10 per cent from the current financial year.

Addressing reporters after the meeting, the Union Labour Minister, Sahib Singh Verma, said the IFCI had already made part-payment to the EPFO at the annual rate of nine per cent, but was required to pay another Rs. 30 crores before the new scheme was made applicable. The Finance Minister had written to the Labour Minister last month, asking him to limit the Ministry's role in the controversy between the IFCI and EPFO, since it was an agreement between the two.The HMT, another public sector undertaking, owes Rs 50 crores to the EPFO.

Mr. Verma said the meeting had also decided to set up two separate directorates of Recovery and Audit & Confidence Validity for the recovery of arrears from defaulting institutions. He claimed that recovery had increased 800 times to Rs. 900 crores in the past few years. ``Even after this, more than Rs. 1,200 crores are to be realised from defaulters and the establishment of the two directorates will help strengthen recoveries,'' he said.

As much as 80 per cent of the Rs 1,200 crores was locked up in litigations.

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