The Central Board of Trustees—EPFO’s (Employees’ Provident Fund Organisation) apex decision making body—on Tuesday has decided to increase investments in certificates of deposits (CDs) of public sector banks and in term deposits with maturities ranging from one and five years. The Trustees also allowed EPFO to borrow from the collateral borrowing and lending obligations (CBLO) market, approved by the Reserve Bank of India.
Until now, EPFO could invest only in fixed deposits with a tenure of less than a year. It was not allowed to invest in CDs or borrow from CBLO.
The decision is expected to improve the performance of EPFO, which was forced to lower its returns to a 10-year low of 8.25% in 2011-12. “The decision to invest in various investment options will improve earnings without compromising safety,” added the labour and employment ministry.
The decision will now be sent to the finance ministry for final approval. However, EPFO has preferred to stay away from increasing investments into the private sector and would study the issue first.
The Finance and Investment Committee of the EPFO had in May suggested greater flexibility, such as investing funds in a greater number of private companies, and lowering investment tenure in private non-banking companies.
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