The Central Board of Trustees (CBT), the apex decision-making body of the Employees’ Provident Fund Organisation (EPFO), is likely to take a number of important decisions including a diversifying of investments into asset classes, which are part of approved pattern of investment, but remained untapped so far. The board could decide to invest up 5% of its incremental deposits — close to Rs 9,000 crore at current level — annually in select private-sector bonds, REITs, InvITs, units issued by category-I & category-II alternative investment funds and AA-rated Basel III Tier I bonds, in order to enhance the yield on investments.
Of the 25 items listed for the 229th meeting, the CBT will ratify the approval already given by the chairman to extend the tenures of both Standard Chartered Bank as custodian of EPFO securities and M/S Jain Chowdhary & Company as the external concurrent auditor to audit investments of EPFO till December 2021.
The CBT will also ratify the extension of tenure of ETF manufacturer of SBI MF and UTI MF till December 31, 2021.
The CBT will also be informed on the status of EPFO’s investment in exchange-traded fund till March 2021. Between August 5, 2015, and March 31, 2021, EPFO has made Rs 1,37,896 crore gross investments in ETFs, but redeemed, between January 2018 and March 2021, ETFs worth Rs 14,910 crore with a capital gain of Rs 8,362 crore.
The CBT will also be apprised of the status of major defaulted and downgraded securities.
Around Rs 11,000 crore investments made between 2010 and 2017 by the EPFO in corporate bonds is a cause for concern for the body as the issuers have either defaulted on paying principal and interest obligations or the securities have been downgraded.