Following the approval of new norms by the board of the Employees’ Provident Fund Organisation (EPFO), the pension fund may invest part of its Rs 5 trillion corpus in infrastructure debt funds (IDFs).
The new norms allow the pension fund body to invest in bonds with tenures up to 25 years and this may enable it to consider IDF investments.
The new rules allow the fund to stay invested upto 25 years (from the earlier 15 years) in AAA-rated state-run firms. The norms also allow the fund to invest upto 15 years from 8 years on AA-rated state-run firms. AAA ratings denote the highest level of safety for bond investments.
It is learnt that EPFO would consider investment in IDFs based on security and suitability for its investment portfolio.
Currently, EPFO plans to invest in IDFs set up by non-banking finance companies (NBFCs) registered with the Reserve Bank of India instead of the three Sebi-registered IDFs that have been launched recently.
Long-term savings of EPFO would be crucial for building new infrastructure that faces severe funding constraints.
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