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Business News/ Companies / EPFO may help members buy homes
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EPFO may help members buy homes

Members with a monthly income of below `15,000 may be provided with the facility, say officials

The retirement fund manager in a meeting on Friday also referred the issue of investing in equities and housing finance companies to an expert panelPremium
The retirement fund manager in a meeting on Friday also referred the issue of investing in equities and housing finance companies to an expert panel

New Delhi: The Employees Provident Fund Organisation (EPFO) may help subscribers to buy homes through a possible range of options that include facilitating loans and partnering with state-owned property developers.

The retirement fund manager in a meeting on Friday also referred the issue of investing in equities and housing finance companies to an expert panel. “We have decided to set up a committee on expanding the investment options," labour minister Bandaru Dattatreya said. His ministry controls EPFO.

The Friday meeting of EPFO’s central board of trustees deliberated on providing low-cost housing facility to its subscribers.

There are two aspects in housing for all when it comes to EPFO, labour secretary Gauri Kumar said—investing a sizable portion of the corpus in housing finance and providing housing facility to subscribers.

The trustees decided to establish another panel comprising experts, authorities and representatives of employers and employees to devise a scheme on housing facility for subscribers.

Only EPF subscribers with a monthly salary of below 15,000 would possibly be provided with this facility, said K.K. Jalan, central PF commissioner.

Both the committees are expected to submit their reports in four months.

EPFO has received a proposal note from the Prime Minister’s Office suggesting that 15% of its corpus should be invested towards loans for low-cost housing. It could generate a credit flow of 70,000 crore towards home loans for low-cost housing, which, in turn, will create 350,000 additional low-cost homes, the EPFO has said in a note.

“The issue of the role of EPFO for providing housing for the poor is gaining prominence not only because houses are one of the most important assets to provide social security for citizens but also because of the focus of the new government on housing for all by 2022," said the EPFO note. Mint has reviewed a copy.

The EPFO, in its suggestions to the trustees, said giving housing loans to subscribers will not be feasible as housing finance is a specialized job, and they have no expertise in it. Instead, it would favour a scheme where it would allow a better withdrawal plan from the employees’ provident fund corpus for housing loans of subscribers.

Jalan said the expert committee would devise the scheme before EPFO takes any decision. EPFO may join hands with a public-sector developer and facilitate loans from an individual’s PF contributions. “But it’s too premature to take a final call without the experts deliberating on it," he said.

The third option could be investing in housing finance companies who give low-cost home loans.

Any such move would be supported by the employers, according to Sharad Patil, secretary of the Employers Federation of India, an industry lobby. “We are for it and if EPFO moves ahead on any such plan, we think it will get both employees’ and employers’ support," Patil said. “Housing is a key need of workers and we are for it."

In another decision on Friday, the trustees, the apex decision-making body of the fund manager, decided to ease norms to invest in commercial bank bonds or fixed deposit schemes.

Also, savings in provident fund will fetch an interest of 8.75% for the year to next March after the finance ministry ratified it on Friday. “We had a discussion today (Friday) with finance ministry officials and I was told the finance ministry has ratified it," central PF chief Jalan said.

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Published: 20 Dec 2014, 12:11 AM IST
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