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EPFO May Make an Investment in Private Corporate Bonds

In order to maximize yields, the Employees' Provident Fund Organization (EPFO) is expected to resume investing in corporate bonds issued by private sector enterprises following a two-year hiatus. According to its current investment strategy, the EPFO can invest up to 20% of its yearly incremental deposits — approximately Rs 36,000 crore at the moment — in corporate bonds. However, in recent years, investments have been limited to bonds issued by public-sector businesses.

Options like when to invest in private-sector bonds and when and how to exit from such investments were discussed at the retirement fund body’s Finance Investment and Audit Committee (FIAC) meeting on Wednesday.

“No concrete decision has been taken today. We have been discussing the issue since last couple of meetings and today, we extended that discussion and deliberated from various angles of risk versus gain and on aspects of such investments,” said K E Raghunathan, a FIAC member and also a member of the Central Board of Trustees (CBT), the highest decision-making body of the EPFO and headed by the Union Labour Minister.

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