While permitting investments in short-duration term deposits of pubic sector banks, the government has decided to give more freedom to non-government provident funds, superannuation funds and gratuity funds in choosing their investment options.
More flexibility has been given to trustees, as in the residual category, with the percentage of funds to be invested in this category increased from 20 per cent to 30 per cent.
The government has reduced the amount to be invested in bonds issued by public sector companies and public financial institutions from 40 per cent to 30 per cent.
Further, in case of any instruments mentioned in the investment pattern being rated and their rating falling below investment grade and the same rating being confirmed by two credit rating agencies, then the option of exit can be exercised.
According to the earlier norms, employee provident funds had to invest 15 per cent in central government securities and 15 per cent in state government papers or any other security where the principal and interest is guaranteed by the Centre or states.
