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EPFO decision on entering stock mkts likely by Dec 5

Last Updated: Tuesday, November 17, 2009 - 18:43

New Delhi: If the Finance and Investment
Committee (FIC) of the EPFO, scheduled to meet here on
December 1, takes a final call on investing a portion of its
massive corpus in the capital markets, as much as Rs 13,000
crore could flow into equities.

The FIC meeting will decide on whether to park a
portion--to the tune of three to five per cent--of the fund`s
corpus of Rs 2.71-lakh crore, into the equities markets. If
the FIC gives a go ahead, its recommendation will go to the
Central Board of Trustees (CBT), the apex body of the EPFO.
The CBT is likely to meet and decide on the issue at its
meeting scheduled for December 5. Generally, the CBT upholds
the FIC`s recommendations.

"The FIC would meet on December 1 to firm up views on
investing three to five per cent of the EPFO corpus in the
stock markets," sources in the Labour Ministry said.

"The CBT meeting has also been scheduled on December 5 and
is likely to take a call on the issue of investment in stock
markets," they added.

The issue has been in debate for quite some time now.
Earlier, the FIC had met on October 8 to decide whether to
invest some of its funds in the stock market, but remained
inconclusive and it was decided that members would meet again
on October 24.

Since there was no unanimity of views in the FIC, it was
decided to have a meeting of the representatives of both
employees as well as employers an hour ahead of the October 24
meeting. However, that meeting was later postponed.

The CBT had referred the matter to the FIC on July 4. At
that meeting, Labour Minister Mallikarjun Kharge, his deputy
Harish Rawat and trade union representatives expressed
reservations about permitting the EPFO to park part of its
funds in the stock markets.
All of them were of the view that it is not proper
to invest retirement funds into risky instruments. Kharge who
also heads the CBT asked the FIC to come back with a detailed
presentation and with more clarity.

Since there were apprehensions over investing money in
shares, an EPFO official suggested at a meeting on August 18
to instead look into the matter of parking these funds in
stock indices.

The FIC at its December 1 meeting would now form views on
this issue.

Bureau Report

First Published: Tuesday, November 17, 2009 - 18:43

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