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Business News/ Politics / Policy/  EPFO money invested in safe, profitable funds: Bandaru Dattatreya
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EPFO money invested in safe, profitable funds: Bandaru Dattatreya

Union labour minister Bandaru Dattatreya says the government has not diverted EPFO money, but only invested in exchange traded funds (ETFs)

Photo: Ramesh Pathania/MintPremium
Photo: Ramesh Pathania/Mint

New Delhi: The money of workers in the Employees’ Provident Fund Organisation (EPFO) has not been diverted to stock markets, but has been invested in funds which are safe and profitable, the government said in the Rajya Sabha.

Replying to a calling attention motion of Congress leader Ahmed Patel, labour and employment minister Bandaru Dattatreya said his “paramount interest will be safeguarding of the interest of workers".

Patel’s motion was on the alleged diversion of money from the EPF to stock markets. Describing the allegation as “totally incorrect", Dattatreya said, “There is no question of diverting funds. This government is pro-poor, pro-worker and pro-progressive... We have made (investments) in exchange traded funds (ETFs) and not in share markets".

ETF is a fund which holds several assets such as stocks, commodities or bonds and most ETFs track an index like a stock index or a bond index.

With regard to the pattern of such investment (pension funds in ETFs) and in long-term investments with equity participation, he said the interests are “positive and encouraging".

“This pattern is giving positive returns the world over. These funds (equity funds) are generally for 10 years or more period, so that’s why this will give encouragement in a positive direction and in a profitable manner," he said.

He assured the house that the government is maintaining a “cautious approach" and is “more concerned" about the workers’ money in the EPFO. “The indications are positive and we are in the right direction," Dattatreya said.

On the quantum of investments in ETFs, he said a 2 March 2015 notification by the finance ministry had prescribed minimum 5% of investible deposits and maximum 15% in ETFs.

Besides, paragraph 52 of the EPF Scheme, 1952, mandates that the investment will be made in accordance with the notification of the central government. Of the total amount, 75% is being invested in Nifty and the remaining 25% in BSE, he said.

“In Nifty there are 50 baskets and in the BSE, 30 baskets. The funds are not invested in individual shares," he added.

The total amount invested, so far, is 7,468 crore and its current market value is 8,024 crore, which is an interest of 7.45%, the minister said.

“Earlier only SBI was investing it, but now to increase competition, we have also allowed UTI," he added. The minister said EPFO’s total corpus is 7.5 trillion and of this 6 trillion was invested in equity, government and corporate bodies till August 2015.

After August 2015, only 1.25 trillion has been invested.

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Published: 02 Aug 2016, 10:53 PM IST
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