New Delhi,Mar,12: Employees’ Provident Fund Organisation (EPFO) can now invest up to 50% of the net worth of an AAA- rated PSU and 40% of that of an AA-rated PSU. There has also been an upward revision in the investment limit for public sector banks with AA+ and AA rating from 45% to 50% of their net worth.
With this decision, EPFO is now in a position to park a larger chunk of its corpus worth Rs 3.5 lakh Cr in corporate bonds of PSUs. The decision was taken by Central Board of Trustees (CBT) on Thursday coming in the wake of EPFO having exhausted the existing limits of investment for AA- rated PSUs (25% of net worth) and AAA-rated PSUs (40% of net worth) such as Power Grid Corporation, Power Finance Corporation, IDBI Bank and Corporation Bank. EPFO is permitted by regulation to invest only 30-60% of its corpus in the bonds of state-held companies, banking and financial institutions, while the balance is invested in Government securities.
The Labour Minister, Mr Mallikarjun Kharge asserted, “The increased exposure to such public sector institutions will help us get more interest, while saving money. Higher returns would also help us finance the increased interest payout in the next fiscal.”
EPFO has suspended further investment in the scam-tainted LIC Housing Finance, until the CBI’s investigation into the multi-crore bribes-for-loan scandal is completed. Retirement fund manager, EPFO has invested up to Rs 454 Cr in the bonds of the LIC Housing Finance Company till date. The current investment norms enable investment up to Rs 846 Cr. However, EPFO, which can invest balance Rs 392 Cr in the housing finance company, has decided not to do so pending completion of the CBI’s investigation into the housing finance racket.
With this decision, EPFO is now in a position to park a larger chunk of its corpus worth Rs 3.5 lakh Cr in corporate bonds of PSUs. The decision was taken by Central Board of Trustees (CBT) on Thursday coming in the wake of EPFO having exhausted the existing limits of investment for AA- rated PSUs (25% of net worth) and AAA-rated PSUs (40% of net worth) such as Power Grid Corporation, Power Finance Corporation, IDBI Bank and Corporation Bank. EPFO is permitted by regulation to invest only 30-60% of its corpus in the bonds of state-held companies, banking and financial institutions, while the balance is invested in Government securities.
The Labour Minister, Mr Mallikarjun Kharge asserted, “The increased exposure to such public sector institutions will help us get more interest, while saving money. Higher returns would also help us finance the increased interest payout in the next fiscal.”
EPFO has suspended further investment in the scam-tainted LIC Housing Finance, until the CBI’s investigation into the multi-crore bribes-for-loan scandal is completed. Retirement fund manager, EPFO has invested up to Rs 454 Cr in the bonds of the LIC Housing Finance Company till date. The current investment norms enable investment up to Rs 846 Cr. However, EPFO, which can invest balance Rs 392 Cr in the housing finance company, has decided not to do so pending completion of the CBI’s investigation into the housing finance racket.
The main benefit of such investment is safety of capital with good return.
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