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Flushed with funds, retirement fund body EPFO has proposed to invest up to Rs 10,000 crore in secured non-convertible bonds of state-run power producer NTPC starting from the current fiscal under a long term agreement.
EPFO has sought approval of its apex decision making body the Central Board of Trustees (CBT) for the investment, as per the agenda of the trustees meet scheduled on August 26.
EPFO has said: "..With the growing size of the fund under management of EPFO, need to have coordinated negotiation with some of the major issuers with PSUs have been felt."
According to the proposal, the NTPC debt instrument will be non-convertible, non-cumulative taxable redeemable bonds.
The Employees' Provident Fund Organisation will invest Rs 2,000 crore to Rs 5,000 crore per annum for three years starting from 2014-15 subject to a maximum of Rs 10,000 crore.
EPFO has planned to invest a minimum of Rs 500 crore in the NTPC bonds every quarter of a year.
Besides, it has pitched for setting up of Public Sector Undertaking (PSU) cell within its Investment Monitoring Cell (IMC) to negotiate with primary issuers (of bonds) on behalf of all fund managers.
According to EPFO, the body being a government organisation, would be in a better position to negotiate with the state-run PSUs issuing of bonds than its fund managers.
EPFO manages a corpus of about Rs 6 lakh crore with an active subscriber base of about 5 crore members.
It had received Rs 71,195 crore as incremental deposits from its subscribers last fiscal, which was 16 per cent higher than Rs 61,143 crore collected by it in 2012-13.
The new government's decision to increase the wage ceiling for EPFO schemes to Rs 15,000 per month from existing Rs 6,500 crore, is expected to bring about 50 lakh more workers under its social security schemes. Thus EPFO's incremental deposits would further increase in coming days.
In view of funds with EPFO, its advisory body Finance and Investment Committee has recommended to approve the proposal of NTPC; to constitute a PSU Cell with IMC and to delegate power of signing agreement with any PSU for purpose to the Central Provident Fund Commissioner.
