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Journalism of Courage
The Employees Provident Fund Orgnisation8217;s EPFO trustees today relaxed the investment norms permitting the Fund to invest larger amounts in the bonds of the state-owned companies and banks,a move that would fetch better returns.
The EPFO8217;s apex decision making body Central Board of Trustees CBT headed by the Labour Minister allowed the Fund to invest up to 50 per cent of the networth of a PSU having AAA rating,as against the existing 40 per cent.
The AAA is the highest rating,which indicates the ability of a company to repay its debts. These rating are provided by credit rating agencies like Crisil,ICRA,Fitch and CARE.
Similarly,the CBT has raised the investment limit from 25 per cent to 40 per cent of the networth for a PSU with AA ratings.
Although,AA rating is a notch below the AAA rating,it indicates that the company is sound enough to discharge its debt obligations.
The trustees also gave their nod to increase investment limit in public sector banks with AA and AA rating from 45 to 50 per cent of their net worth.
8220;We have decided to raise the investments limits in AAA,AA and AA rated public sector undertakings and banks to get better returns,8221; Labour Minister Mallikarjun Kharge told reporters after the CBT meeting here.
EPFO manages huge corpus of over Rs 3 lakh crore with a subscriber base of about 4.7 crore. It mainly invests in government securities and public sector bonds.
The investments are guided by the norms prescribed by the CBT. The public sector entities8217; bonds give better rate of interest than government securities.
