Reports suggest that the officials of labour ministry and the finance ministry may soon discuss the issue of allowing Employees’ Provident Fund Organisation to invest in infrastructure debt funds (IDF).
Presently, EPFO is not allowed to invest a part of its Rs 5 lakh crore corpus in the IDF. It is learnt that the organisation, through the labour ministry, has already begun talks with the finance ministry on the issue.
Besides yielding good returns for EPFO, the move, if it goes through, may also help meet the funding gap in the
In 2011-12, the EPFO could offer just an 8.25 per cent return to its subscribers because of strict investment guidelines that allow a majority of its corpus to be put in government backed securities.
The finance ministry has been pushing for more investment in the infrastructure sector by insurance as well as pension funds. Bank lending to infrastructure sector causes asset liability mismatch in the books of banks.
While the department of economic affairs had earlier written to the EPFO to invest in infra debt funds, the department of financial services has also asked the insurance regulator IRDA to relax norms for insurance firms to allow for greater investment in the infrastructure sector.
While the idea of setting up an IDF was originally discussed way back in 2009, former finance minister Pranab Mukherjee had in Budget 2011-12 announced that such funds would be set up.