It was learnt that the HVPN amount was deposited in a savings bank account with the Yes Bank. The HVPN was managing provident fund of employees in a Trust. The amount was to be invested in AAA-rated institutions so that the corpus could grow and meet liability of provident fund and pension. It was learnt that the amount was parked in Yes Bank for the time being as instrument for investment was yet to be found, but now, it was blocked.
If the amount remained parked in the savings bank account for five to six months or up to a year, the Provident Fund Commissioner could raise an objection that the savings bank account was not AAA-rated and violated Ministry of Finance guidelines.
VS Kundu, ACS and GMDA CEO, confirmed that there were FDRs in Yes Bank. He, however, added, “We have been assured that we can withdraw these soon.” It was also learnt from reliable sources that deposits of Kurukshetra University (KU) of over 100 crore and of Gurugram Metropolitan Development Authority (GMDA) of over 150 crore had also been blocked. The Haryana Government has sought details from all departments, boards, corporations and universities to provide details of their deposits in various banks, including Yes Bank.
t is worth mentioning that Moody’s Investors Service has also placed the bank’s long-term foreign and local currency bank deposit rating of ‘Ba3’, foreign currency senior unsecured MTN program rating of (P) ‘Ba3’, and Baseline Credit Assessment (BCA) and adjusted BCA of ‘b1’, long-term Counterparty Risk Assessment (CR Assessment) of Ba2 (cr) and long-term domestic and foreign currency counterparty risk rating (CRR) of Ba2. Naturally the employees panicked when the Reserve Bank of India (RBI) sometime back placed Yes Bank under a moratorium with depositors allowed to withdraw a capped amount of 50,000 per account for a month. The moratorium has since been lifted. The RBI took the decision in consultation with the government to protect depositors’ interest. The RBI also superseded the board of Yes Bank, which had not been able to raise required capital for the past six months.
Finance Minister, Nirmala Sitharaman has assured that depositors money was safe in Yes Bank, but the question remains how government departments or autonomous bodies could defy existing rules of depositing funds only in AAA ranked financial institutions.
Naturally, the employees are perturbed. “We want to know how much money has been invested in Yes Bank. We do not want to lose our money. We will wait till March 12 and may go on strike thereafter,” said All Haryana Power Corporation Workers’ Union president Subhash Lamba.
Significantly, Haryana is not the only State Government that has invested employees funds relating to PF in a questionable manner. Recently, the Uttar Pradesh government had to suffer humiliation when Uttar Pradesh Power Corporation Limited, unlawfully invested 4122.70 crore provident fund of power employees in Dewan Housing Finance Corporation Ltd (DHFCL), a Mumbai based private housing finance company, against all prescribed norms.
The DHFCL was in news sometime back due to its alleged connection with the company of gangster Iqbal Mirchi, a former aide of Dawood Ibrahim. When the DHFCL promoters were grilled by the Enforcement Directorate, the UP government referred the case to the CBI. The Economic Offence Wing (EOW) of UP police subsequently arrested the then Managing Director, AP Mishra, Director Finance, Sudhanshu Dwivedi and former secretary of the GPF and CPF Trusts
All India Power Engineers Federation Chairman Shailendra Dubey, said, “How can the probe by the UP government hope to unearth the culprits behind this conspiracy, especially when the investments are linked with Dawood Ibrahim and Iqbal Mirchi’s company and the ED was grilling DHFL officials?”
What do the rules say?
How all this has been happening is a mystery because Director, Public Enterprises, the Ministry of Heavy Industries and Public Enterprises has circulated recommendations of the Joint Parliamentary Committee amongst all ministries/departments. The Director wrote that the Joint Parliamentary Committee (JPC) in its report on “irregularities in securities and banking transactions” have made a number of recommendations covering the areas mentioned above. These recommendations have been considered by the Government and the government has decided accordingly.
It was noted by the Committee that while the Government permitted PSUs to have banking transactions with foreign banks, it was not monitored properly. As such the Government has decided that the administrative Ministries dealing with particular PSU should monitor adherence to all guidelines issued by the Government. The PSUs should report to the administrative Ministry in case of inability to comply with particular guidelines and the Ministry will consider condonation or enforcement by issue of a Presidential directive.
On an observation of the Committee about the policies and procedures followed by the public sector undertakings in respect of the investments of their surplus funds, the Government has taken note of the fact that the policies and procedures followed by the PSUs in many cases were not in conformity with the guidelines and did not satisfy acceptable norms. The administrative Ministries are requested to take appropriate action to demarcate the responsibilities of the Government in its different Ministries/Departments and their nominee Directors as well as the Board of the Public Sector Undertakings, the whole time Directors and its top managers.
The committee also raised the question of the duty and responsibility for ensuring, implementation of guidelines. It is the primary responsibility of the PSUs to abide by Governmental guidelines. With regard to investment of surplus funds, the Committee has suggested that the policies should be clear-cut and transparent.
The administrative ministries are also desired to lay down guidelines for the PSU under their control in the matter of regular reporting of financial transactions to the Board having regard to the nature of its business, size of financial transactions and the level to which the financial powers have been delegated.
The directions further say that boards of all PSUs are directed to lay down clear policies on investment of surplus funds, establish transparent procedures, review delegation of authority and prescribe regular reporting of investments to the Board. The administrative Ministries and the Public Enterprises are advised to keep the decisions of the Government on these various recommendations of the JPC in view and take appropriate measures in accordance with the Government decision indicated above. The Ministries may, in turn, issue suitable instructions to the enterprises for strict compliance.
Interestingly even when clear cut instructions and rules are in place, the state entities have been parking funds in financial institutions that are not 100 per cent safe for such investments.