One of the lenders to the beleaguered Dewan Housing Finance Limited (DHFL), is Employees Provident Fund Organisation, EPFO. It is still to get about Rs 700 crore which it had invested in the form of 10-year bonds in DHFL. The EPFO is now planning for an early redemption of this amount which otherwise matures only by 2024.
EPFO is the custodian of these retirement funds of millions of employees in the country and pays them interest on their savings by earning interest through such investments. It is only when some of these investments look doubtful to recover, like in the case of DHFL, the organisation gets worried. Those in control at EPFO however claim that the officials at DHFL have assured them that the funds will be paid back.
EPFO had made a total investment in bonds in DHFL of Rs 1,300 crore. This portion of about Rs 700 crore is what is remaining to be recovered.
It is said the crisis is a direct outcome of the collapse of the other NBFC, IL&FS and since the month of June, EPFOâ€™s investment committee has met at least on four occasions to find out ways to recover the investments in DHFL and have been holding parleys with the housing finance company as well. There is an amount of Rs 574 crore lying with IL&FS too, that is still to be recovered by EPFO. The retirement fund manager had seriously considered approaching the debt recovery tribunal. However, on the assurances of the DHFL officials, the proposal was dropped.
It has been reported earlier that the board of DHFL had held a meeting in the first week of this month and had discussed this very subject of repayments to lenders and investors. One decision to have emerged from that meeting was that the creditors will be returned the full principal amounts due to them and no cuts will be necessary. DHFL needs as much as Rs 15,000 crore so that it can start lending and earn revenues which will make it possible to make the repayments. This is easier said than done with the banks wary of lending to NBFCs. Even the new partial guarantee scheme announced by the government limits a single NBFC to Rs 5,000 crore in terms of their assets being purchased by the banks.
EPFO may wait till September before it mulls any other action to recover the Rs 700 crore from DHFL. As of now, they are going by the personal assurances from the DHFL management that the amounts will be paid back.