The decision will allow EPFO, which has a corpus of Rs3.5 lakh crore, more flexibility in its investment
New Delhi: The Central Board of Trustees (CBT) has given green signal to retirement fund body Employees' Provident Fund Organisation (EPFO) to park its funds in fixed deposits (FDs) upto five years, short term securities and certificate of deposits (CDs) of public sector banks, reports PTI.
The proposal to provide greater freedom to EPFO in additional financial instruments, was approved by the CBT at a meeting in the capital.
However these approved proposals will have to be cleared by the government before implementation.
EPFO has corpus of Rs3.5 lakh crore and needed to increase its returns on investments to provide higher rate of interest to subscribers.
"What has been agreed....which again will be recommended to the government and it has to take a view, is that the borrowing in the collateral borrowing lending obligation (CBLO) is to be permitted, the investment in the CDs of the public sector banks also is to be permitted and and the investment in FDs for more the one year and less than five years is also be permitted," Central Provident Fund Commissioner RC Mishra told reporters after the CBT meet.
As per the proposal, the EPFO would be allowed to participate in CBLO, approved by the the Reserve Bank of India (RBI).
The decision will allow EPFO more flexibility in investment in the primary options of short term securities by the RBI.
The PF body also got approval of trustees to park its funds in certificate of deposits (CDs) issued by public sector banks as they provide higher returns.
CDs are issued by banks to raise funds from the market and are tradeable instruments.