Pension-funds may be allowed in LIC Housing

| Updated on: Feb 06, 2011

Retirement-fund manager Employees' Provident Fund Organisation's trustees are likely to approve a proposal to recommence investment in LIC Housing Finance at their meeting scheduled on February 15.

The organisation's apex decision-making body, the Central Board of Trustees, headed by the Labour Minister, had decided to suspend investment in LIC Housing Finance till the CBI completed its investigation into the alleged involvement of the home loan company's top official in the bribes-for-loans scam.

However the CBI is yet to complete its probe into the LIC Housing Finance scam.

The organisation had invested Rs 454 crore in the bonds of LIC Housing Finance Company.

The fund manager's prevailing investment norms allow for investment of up to Rs 846 crore in the company.

LIC Housing Finance Company is a subsidiary of LIC, the largest insurance company in India.

The organisation's advisory body, the Finance and Investment Committee (FIC), took up the issue in its meeting on January 28 and recommended the resumption of investment in LIC Housing Finance.

Recommendations of the advisory body are generally upheld by the trustees. Hence, it is likely that the trustees may resume investment in LIC Housing Finance.

At the meeting, member Mr A.D. Nagpal, also one of the unionists, supported new investment in LIC Housing Finance.

Mr Nagpal, Secretary of the Hind Mazdoor Sabha, had said investment could be resumed in LIC Housing Finance in view of the explanation given by the Finance Ministry's Department of Financial Services and reaffirmation of the highest rating for the lender by Crisil and Care.

In his letter to Mr P.C. Chaturvedi, Labour Secretary, in December, Mr R Gopalan, Secretary, Department of Financial Services, had asked for remedial measures in respect of the organisation's decision not to invest any further in LIC Housing Finance.

In November last year, the CBI had arrested LIC Housing Finance's chief executive Mr Ramachandran Nair and seven other senior bankers for allegedly colluding with real-estate firms to sanction large-scale corporate loans, overriding the mandatory due diligence involved in such approvals, besides other irregularities.

Published on February 07, 2011

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