 "EPFO")
Brushing aside strong opposition from the unions, Labour Ministry on Thursday doubled Employees' Provident Fund Organisation's (EPFO's) investment limit in Exchange Traded Funds (ETFs) to 10 per cent that will result in Rs 13,000 crore of the retirement fund body flowing into stock markets in the current financial year (FY).
It has raised the limit of investments by the EPFO in the ETFs in FY17 to 10 per cent of investible income from 5 per cent in FY16.
"We have already issued a notification raising the EPFO investment limit of ETFs to 10 per cent from the current 5 per cent of its investible deposits," Labour Minister Bandaru Dattatreya told reporters at a press conference in New Delhi.
EPFO has already invested Rs 1,500 crore in ETFs in the first half of the current FY and will invest about Rs 11,500 crore in the remaining six months.
When asked whether Labour Ministry has sought the EPFO trustees' approval, Dattatreya said: "The issue was discussed twice in the CBT meeting. Some members had reservations against the ETF investments."
Asked whether the Central Baord of Trustees (CBT) approval is not required, Labour Secretary Shankar Aggarwal said: "Government (Labour Ministry) is over and above the board."
He was of the view that when the CBT is not able to take decision on a issue then the Labour Ministry is appropriate government body to take a decision for the benefit of the workers according to the EPF Act.
However, the trade unions have slammed the Labour Ministry for taking a "unilateral" decision without approval of the EPFO trustees.
They have been opposing investments by EPFO in the stock markets in view of their volatile nature and had been unanimous on the issue.
