EPF suffers nearly Rs. 20 b in direct losses; over Rs. 12 b in foregone earnings

Tuesday, 4 March 2025 03:43 - - {{hitsCtrl.values.hits}}

Losses identified by Verité Research are limited by scope and process of audit

The Employees’ Provident Fund (EPF) has suffered close to Rs. 20 billion in losses from bond and equity market investments, with an additional Rs. 12 billion in foregone earnings, as a result of bypassing due process and investing in unlisted equity, according to a new report by Verité Research.

The report has calculated these losses and foregone earnings by analysing the findings of two forensic audit reports commissioned after a series of investigations into the infamous ‘bond scam’ of 2015.

The key findings of the report are:

Bond market losses: The EPF incurred losses of Rs. 9,826 million (2002-2015) as a result of acquiring bonds at unfavourable prices.
Equity market losses: The EPF incurred losses of Rs. 9,859 million (1998-2017) from irregular investments in the equity (share) market, most of it a result of the ‘pumping-and-dumping’ of shares to the EPF.

Unaccounted equity losses: The EPF also incurred Rs. 12,382 million (2007-2017) as foregone earnings by investing in unlisted companies instead of Government securities, which provide fixed positive returns every year.

The full extent of the losses is not captured due to two serious limitations in the forensic audits. (i) The bond market audit only covers transactions up to February 2015, excluding losses that occurred in the aftermath of the ‘bond scam’ of February 2015 and (ii) The audits identify only the direct losses from transactions where there is documentable violation/an anomaly in the conduct of the transaction; the foregone earnings from such transactions are not reported by the audits.

The final report can be found at https://www.veriteresearch.org/publication/forensic-audit-of-central-bank-2019-assessment-of-losses-to-the-epf/.

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