An Employees Provident Fund Organisation committee has rejected the finance ministry's proposal to invest 15% of the EPF corpus in stocks.
At a meeting held here on Thursday, EPFO's finance and investment committee rejected the proposal for parking up to 15% of the corpus of Rs 1,82,000 crore in shares of listed companies as also equity-linked schemes of mutual funds.
Sources said the committee was opposed to the finance ministry's proposal in view of the volatility witnessed in the stock markets in the recent past.
The finance ministry had in August last year suggested a new investment pattern to EPFO under which the organisation could park up to 15% of its funds in companies listed on the Bombay Stock Exchange and the National Stock Exchange and also equity-linked schemes of Sebi-regulated mutual funds.
The trade unions were vehemently opposed to this proposal. The trade union representatives on EPFO's central board of trustees had at its meetings argued that PF money should instead be parked in public sector financial institutions which were much safer than the volatile stock markets.
The finance ministry had come out with the proposal after EPFO allowed private players HSBC, Reliance Capital and ICICI Prudential to manage the incremental funds of EPFO in July last year. EPFO had also selected the country's largest public sector bank, State Bank of India, for the purpose.
The ministry wanted EPFO to invest in stocks to increase its yield on the funds. In April last year, the banks were offering an interest rate of 9% or more. But EPFO found it difficult to announce even 8.5% returns for 2008-09.
At a meeting held here on Thursday, EPFO's finance and investment committee rejected the proposal for parking up to 15% of the corpus of Rs 1,82,000 crore in shares of listed companies as also equity-linked schemes of mutual funds.
Sources said the committee was opposed to the finance ministry's proposal in view of the volatility witnessed in the stock markets in the recent past.
The finance ministry had in August last year suggested a new investment pattern to EPFO under which the organisation could park up to 15% of its funds in companies listed on the Bombay Stock Exchange and the National Stock Exchange and also equity-linked schemes of Sebi-regulated mutual funds.
The trade unions were vehemently opposed to this proposal. The trade union representatives on EPFO's central board of trustees had at its meetings argued that PF money should instead be parked in public sector financial institutions which were much safer than the volatile stock markets.
The finance ministry had come out with the proposal after EPFO allowed private players HSBC, Reliance Capital and ICICI Prudential to manage the incremental funds of EPFO in July last year. EPFO had also selected the country's largest public sector bank, State Bank of India, for the purpose.
The ministry wanted EPFO to invest in stocks to increase its yield on the funds. In April last year, the banks were offering an interest rate of 9% or more. But EPFO found it difficult to announce even 8.5% returns for 2008-09.
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