Labour ministry says seven public sector companies have approached it for investments
Blue chip public sector undertakings (PSUs) are eyeing funds from the Employees Provident Fund Organisation (EPFO) which is sitting on a huge pile of cash, said labour minister Bandaru Dattatreya.
The minister admitted EPFO is looking for better returns following dwindling bank-interest rates, post note ban. Following interest-rate cut by banks, the EPFO will have to change its strategy with regard to investment pattern, to give better interest rate to its subscribers, said the minister.
The EPFO recently announced that the rate of interest for this year would be 8.65%. EPF subscribers got 8.80% interest rate in 2014-15 and 2015-16.
Dattatreya said presently EPFO can invest up to 20% of its investable amount which is pegged at about Rs 1.3 lakh crore this year in central-government PSUs, and the ministry plans to increase it to 30%.
“We are also seriously thinking about it. Many public sector units need investments. We may invest more in them. We may change our priorities in future. We will concentrate more on central public sector units,” Dattatreya said.
“As of now, about seven PSUs came forward to take investments from us (EPFO). We received a communication from the ministry of finance to increase our investments in PSUs. The return may be higher than what we are getting now,” he said.
“Indian Oil Corporation Limited, Coal India Limited, ONGC Limited, Bharat Electronics, Engineers India Limited Power Finance Corporation and Rural Electrification Limited are among the PSUs that need funds from EPFO,” Dattatreya said.
He said the proposal to increase investments in PSUs will be placed before the next meeting of Central Board of Trustees (CBT) for ratification.
“We are planning to open a cell in our ministry to study the future investment pattern. After finalising the patterns, the proposals will be placed before CBT for approval,” he explained.
Meanwhile, a senior official of the EPFO said the organisation has invested Rs 13,526 crore in Exchange Traded Funds (ETFs) so far, and that the value of the investment stood at Rs 13,906 crore.
The finance ministry in 2015, notified a new investment pattern for EPFO, allowing the body to invest a minimum of 5% and up to 15% of its funds in equity or equity-related schemes. The EPFO had started investing up to 5% of its investable deposits in ETFs in August 2015. EPFO’s investable deposits (annual) is around Rs 1.30 lakh crore and it manages a corpus of about Rs 8 lakh crore.
BENEFIT SEEKING
- Following the interest-rate cut by banks, EPFO will have to change its strategy, labour minister Bandaru Dattatreya said
- EPFO is looking for better returns following dwindling interest rates, post note ban
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