EPFO mulls enhancing exposure in private sector bonds

10% incremental investment is allowed in private sector currently; proposal is to raise it to 15%

Retirement fund body EPFO trustees will consider a proposal to increase the limit for investment in private sector bonds from existing 10 per cent to 15 per cent in their meeting scheduled on December 19.

"..in order to utilise the opportunity of earning best possible returns from the available pool of private sector companies it is proposed to increase the limit in private category upto 15 per cent from existing 10 per cent," the agenda for the trustees' meet stated.

As much as 10 per cent of incremental investment is allowed in the private sector category as per the current investment guidelines.

According to the agenda, with the adoption of new pattern of investment from January 1 this year the Employees' Provident Fund Organisation (EPFO) has been permitted to undertake investment in private sector category dual AAA rated banks Term Deposit.

As a result, large chunk of private category investments have gone into such papers fetching good returns.

At present, investment in private category bonds has not been more than 4 per cent of the total allotted 10 per cent, mainly due to very restrictive guidelines making eligible very few private sector companies.

The investment pattern notified by Labour Ministry in November last year permits investment in Public Sector Undertaking (PSU) category and Private Category upto 55 per cent of the corpus.

EPFO manages a corpus of over Rs 6 lakh crore. It had received an incremental deposits over Rs 70,000 crore last fiscal.

The body is expected to receive around Rs one lakh crore during the current financial year. It has a subscriber base of over five crore.