Over Rs 4,000 crore will flow into the bonds of joint ventures promoted by public sector undertakings every year following the decision of the provident fund authorities to relax investment norms.
The decision of the Central Board of Trustees (CBT), the apex policy-making body of the Employees Provident Fund Organisation (EPFO), will allow the EPFO that manages a corpus of Rs 2.5 lakh crore to park up to 10 per cent of accruals annually in bonds of PSU joint ventures like LIC Housing Finance and ONGC Videsh.
The move, sources said, will give wider investment choice to fund managers and maximise the returns for 4.7 crore subscribers.
"We are investing about 10 per cent of our incremental investments in private sector bonds. It (the decision) tantamount to putting over Rs 4,000 crore annually into such instruments," said an EPFO note on the basis of which the CBT, headed by labour and employment minister Mallikarjun Kharge, cleared the new investment guidelines.
The revised guidelines will allow EPFO to park funds into the bonds of companies in which a minimum of 26 per cent is held by the Centre, states or PSUs.
As per the existing guidelines, the EPFO can pick up bonds of only five private sector entities which are ICICI Bank, HDFC, HDFC Bank, Axis Bank and IDFC.
"We want more revenues--first to invest money and then get better yield. But nothing from the private sector. The decision is that it will only be in public (sector companies) and (in their) joint ventures, because we would like the money of the workers to be absolutely safe," Labour Secretary Prabhat Chaturvedi told reporters after the CBT meeting.
