To get EPFO funds listed firms need at least Rs 5,000 cr m-cap

According to the new rules, EPFO will invest a minimum of 5% and up to 15% of incremental deposits in equity or equity-related schemes

To get EPFO funds, listed companies would need to have a minimum market capitalisation of Rs 5,000 crore, even as the retirement fund body will invest only the exchange traded funds (ETF) in the current financial year.

According to the new investment pattern notified for investing incremental deposits of EPFO, investment would be in "shares of body corporates listed on Bombay Stock Exchange (BSE) or National Stock Exchange (NSE) which have market capitalisation of not less than Rs 5,000 crore as on the date of investment".

For current financial year, the Employees' Provident Fund Organisation (EPFO) has decided to invest around Rs 5,000 crore, which is 5% of its incremental deposits of around Rs 1 lakh crore, in exchange traded funds (ETF) only.

The new investment pattern notified on April 23 by the Labour Ministry states that EPFO will invest a minimum of 5% and up to 15% of incremental deposits in equity or equity-related schemes.

EPFO will invest in shares of those body corporates which have derivatives with underlying, trade in either of the two stock exchanges BSE or National Stock Exchange.

The retirement fund body can also invest in units of mutual funds regulated by the Securities Exchange Board of India and which have minimum 65% of their investment in shares of body corporates listed on BSE or NSE.

The guidelines also state that the aggregate investment in units of mutual funds shall not be in excess to 5% of total portfolio of fund at a time and fresh investment in such mutual funds shall not be more than 5% of the fresh accretions invested in the year.

According to new norms, EPFO can invest in ETFs or index funds regulated by the Sebi that replicate the portfolio of either BSE Sensex or NSE 50.

Investment is also permitted in in ETFs issued by Sebi regulated by mutual funds constructed specifically for disinvestment of shareholding of Government of India in body corporates.

The norms also provide for investing EPFO funds in the exchange traded derivatives regulated by Sebi having sole purpose of hedging.

The investment pattern will be achieved separately for each successive financial year through timely and appropriate planning, the notification said.

As per the new norms, the EPFO will invest 45-50% its incremental deposits in government securities and related investment.

EPFO shall invest 35-45% of its incremental deposits in debt instruments including those issued by banks, body corporates and public financial institutions.

It will continue to invest up to 5% of its deposits into money market instruments.