The Employees’ Provident Fund Organisation has decided to increase the investment basket of the fund but the risk-averse organisation once again fought shy of greater exposure to private sector paper.
The Central Board of Trustees — the EPFO’s apex decision making body — on Tuesday decided to permit investments in certificates of deposits of public sector banks and in term deposits with maturities between one and five years. The Trustees also gave the go ahead to borrow from the collateral borrowing and lending obligations (CBLO) market, approved by the Reserve Bank of India.
Until now, the retirement fund manager could invest only in fixed deposits with a tenure of less than a year. It was not allowed to invest in CDs or borrow from CBLO.
The move is aimed at improving the performance of the EPFO, which was forced to slash its returns to a 10 year low of 8.25 per cent in 2011-12. “The increased investment option will improve earnings without compromising safety,” said labour and employment minister Mallikarjun Kharge.
The decision will now be forwarded to the finance ministry for final approval. The CBT also restored the status of IDFC as a public finance institution. But the risk-averse trustees chose to stay away from increasing investments into the private sector and have called for a study into the issue.
The Finance and Investment Committee of the EPFO had in May recommended greater flexibility, such as parking funds in a greater number of private firms, and lowering investment tenure in private non-banking companies.
EPFO gives nod to RCap stake sale
The Central Board of Trustees of the EPFO on Tuesday gave their nod to the proposal of Reliance Capital Asset Management (RCAML) to sell 26 per cent stake to Japanese insurance firm Nippon Life.
“The stake sale has been approved as it in no way affects the status or structure of the company,” Central PF Commissioner RC Mishra said. Reliance Capital, is one of the four fund managers of the EPFO managing 20 per cent of its corpus. The approval was needed because as per the contract with the EPFO, its fund managers cannot do mergers, acquisitions etc without the approval of the Trust.