EPFO aims at investing in private sectors
The Employees Provident Fund Organization, better known as EPFO, a leading retirement fund corporation, has asked for greater flexibility in investing in private sectors and in NBFC (Non banking finance companies).
The EPFO’s central board of trustees is set to meet next week to discuss investment possibilities in the private sector and EPFO is also considering investing in instruments that have tenure of 15 years, a rise from the current 10 year policy.
This move is being planned as the company has exhausted its investment limits and is hence looking for possible fields for expansion. Under the present scenario, the EPFO has the authority to invest in seven entities consisting of three banks and four non banking institutions.
The banks involved with the EPFO are Axis bank, HDFC and ICICI and the non banking institutions are IDFC Ltd, IL&FS Ltd, HDFC Ltd and LIC Housing Finance Ltd. The private sector banks offer lower returns than their private sector counterparts and this is the major reason for the lookout for possible investment plans.
The Provident Body wants the Board of Trustees to allow it to invest in certificate of deposits in public sector banks as they have a higher investment limit. Certificate of Deposits are issued by the banks to primarily increase its funds by trading in the share market. CDs are actually trading instruments that a bank possesses.
The EPFO also wants to raise the time frame of investing in fixed deposits to five years from the present one year cap. These decisions, if taken, are sure to help raise funds for the EPFO and hence the company is determined to get the necessary permissions to invest.
According to company statistics, if the investment plans are passed, the company will be able to recover from losses incurred during the 2010 - 2011 period. During the 2010 – 11 periods the company had reduced PF deposit rates to 8.25 % from 9.5 % for all its subscribers.