New Delhi: The government is set to issue revised investment norms for non-government provident funds, superannuation pension funds and gratuity funds which will focus more on generic investment schemes rather than any specific products, a senior government official said on Wednesday. An attempt has also been made to make the funds simple to administer through the revised norms, they added.
“The revised guidelines are ready and will be put on the finance ministry website in the next few days,” an official said. The first draft on investment norms for private provident funds was first put out in September last year, following which the finance ministry received a number of suggestions which it felt were significant enough to be incorporated.
According to the original draft, the government had doubled the capital market exposure limit for provident funds from 5% to 10% of the corpus. This amount could be invested in shares of Companies having investment grade rating or those figuring in the BSE Sensex or NSE Nifty indices. The draft had also lowered the proportion of total funds to be mandatorily parked in central and state government securities from 40% to 35%.
While some company-run provident fund trusts have dabbled with the 5% investments in equities allowed by the finance ministry in early 2005, the biggest non-government provident fund, the Employees’ Provident Fund Organisation, is yet to start investing in equities because its Central Board of Trustees has scotched the plan. Ironically, the employee unions on the Board have been asking the government to raise the EPF rate from 8.5% to 9.5% even as they have opposed any changes in investment norms that could boost earnings.
Meanwhile, a high-level committee on external commercial borrowings is expected to meet around May 15, sources added. It may then look into easing the inflow of such funds.
The government had earlier indicated that curbs on foreign capital in the form of restrictions on ECBs are likely to be reviewed when the situation improves. Capital inflows in to the country have been at a record high since last year. It is estimated that in the first half of this fiscal, about Rs 10,557 crore was raised in the form of ECBs almost double of what was raised in the same period in 2006-07.
EPFO expects 15 bids for fund manager job
The Employees Provident Fund Organisation (EPFO) is expecting about 15 bids for the management of its mammoth corpus
of over Rs 100,000 crore. EPFO, the country’s largest retirement fund and is the second largest non-banking financial institution after the Life Insurance Corporation of India, had recently called for bids from fund managers to abolish the monopoly of the State Bank of India over its investment management. “We have already got seven expressions of interest till yesterday. We expect about 12 to 15 EoIs for fund managers in total,” A Viswanathan, Central Provident fund commissioner EPFO said. The deadline for submitting bids is Wednesday. UTI Asset Management Co Ltd and LIC Mutual Fund Asset Management Co Ltd both confirmed that they have put in bids for the project.
