EPFO plans to ease norms to invest corpus in private sector bonds

EPFO

Retirement fund body EPFO is planning to relax investment norms so that a part of its corpus can be invested in bonds of private sector companies to ensure better returns for its over 50 million subscribers.

According to the agenda listed for the meeting of EPFO's advisory body, Finance and Investment Committee (FIC), it has proposed to reduce the maximum tenure of investment in non- banking private sector companies from 15 years to 10 years.

Employees' Provident Fund Organisation (EPFO) has also suggested that the condition under which fund can be invested in companies with minimum 26 per cent government holding, should be removed.

The official note to FIC has argued that relaxation of investment norms will provide more investment options to EPFO and ensure better returns for subscribers.

Under the existing guidelines, EPFO can invest in only seven private sector companies and banks which meet the criteria - HDFC Ltd, IDFC Ltd, IL&FS Ltd, LIC Housing Finance, HDFC Bank, ICICI Bank and Axis Bank.

The note further said that these companies find it cheaper to raise funds from overseas markets through external commercial borrowings and do not regularly tap the domestic sources.

On the other hand, the corpus of EPFO keeps on growing at annual rate of almost 16 per cent. Since the new investment pattern was introduced, the corpus has grown from Rs 1.14 lakh crore in 2003 to over Rs 4 lakh crore as on March 2012, the note added.

The increase in investment opportunity in private sector category, it added, has been able to keep pace with rapid increase in corpus growth as exposure limit for private sector has remained constant.

Once the proposal is approved by the FIC in its meeting scheduled on February 14, it would be placed before the EPFO's apex decision making body Central Board of Trustees (CBT) for final approval.

... contd.

Please read our terms of use before posting comments
TERMS OF USE: The views, opinions and comments posted are your, and are not endorsed by this website. You shall be solely responsible for the comment posted here. The website reserves the right to delete, reject, or otherwise remove any views, opinions and comments posted or part thereof. You shall ensure that the comment is not inflammatory, abusive, derogatory, defamatory &/or obscene, or contain pornographic matter and/or does not constitute hate mail, or violate privacy of any person (s) or breach confidentiality or otherwise is illegal, immoral or contrary to public policy. Nor should it contain anything infringing copyright &/or intellectual property rights of any person(s).
comments powered by Disqus