The Employees’ Provident Fund Organization (EPFO)
has revived a proposal to start a commercial bank despite concerns whether the
retirement fund manager has the ability to do so.
EPFO hopes the proposed Workers’ Bank will help it
expand investments, increase earnings and improve subscribers’ engagement with
the organization, which manages a corpus of over Rs.6 trillion and has an
active subscriber base of more than 42 million.
EPFO, which functions under the labour ministry, may
soon send the proposal to the finance ministry for consideration although the
Reserve Bank of India (RBI) suggested when the proposal first came up in 2011
that such an option may not be feasible.
The Workers’ Bank is proposed to be modelled on
Members’ Equity Bank, Australia, which is supported by the Australian Council
of Trade Unions.
The commissions and service charges that are now
paid to banks by EPFO can be used as working capital once the proposed bank is
up and running. It can also manage its growing corpus instead of going to
third-party portfolio managers.
Instead of withdrawals, the bank can provide
repayable loans to EPF subscribers. It can also provide personal loans to
members based on their EPF balance, according to an EPFO document.
According to the document dated 19 July 2011 and
placed before EPFO’s central board meeting on 19 December 2014, starting a bank
with EPF money may be ideal in meeting the requirements of workers, besides
providing an avenue for deploying EPF funds profitably.
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