MONEY

EPFO board may raise investments cap in equities to 20%, CBT likely to okay soon

Employees’ Provident Fund Organisation (EPFO) is likely to approve this month a proposal to enhance its investments in equities to up to 20 per cent of the investible deposits from the current limit of 15 per cent. 

The proposal is expected to be considered and approved during the EPFO trustees’ meeting scheduled to be held on July 29 and 30, according to a source. 

At present, EPFO can invest 5 to 15 per cent of the investible deposits in equity or equity-related schemes. 

The proposal to revise the limit to 20 per cent has been vetted and approved by the EPFO’s advisory body, Finance Audit and Investment Committee (FAIC). 

The recommendation of FAIC will be placed before the retirement fund body’s apex decision-making body, the Central Board of Trustees (CBT), for consideration and approval. 

“'The Central Board of Trustees (CBT), headed by Union Labour Minister, is likely to approve the recommendation of the FAIC for increasing the investment in equity and equity-related scheme to 5-20 per cent from existing 5-15 per cent,”' the source added. 

In a written reply to the Lok Sabha on Monday, Minister of State for Labour and Employment Rameshwar Teli said: “'FIAC, a sub-committee of CBT, EPF, has recommended for the proposal to increase investment in equity and related investments in category-IV of the Pattern of Investment from 5-15 per cent to 5-20 per cent for consideration of CBT, EPF.”'

The EPFO started investing in exchange-traded funds (ETFs) in August 2015, putting 5 per cent of its investible deposits in stock-linked products. It was raised to 15 per cent for the current financial year. 

Trade unions have been opposing any investment in stock markets by EPFO as these are not backed by a government guarantee.

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