The Finance Investment and Audit Committee (FIAC) of the Employees’ Provident Fund Organisation (EPFO), in its scheduled meeting today, is likely to deliberate on fresh investment opportunities in new Alternate Investment Funds (AIFs), including Infrastructure Investment Trusts (InvITs).
Finance Investment and Audit Committee (FIAC) of EPFO
The highest decision-making body of the EPFO, the Central Board of Trustees (CBT), decided to empower the FIAC to make decisions on investing in new asset classes like the InvITs in November. The CBT of the EPFO is a tripartite body involving employers’ representatives, workers and the government. Its decision is binding on the organisation, and the Union Labour Minister heads it.
The FIAC decides upon the investment options on a case-to-case basis for investments in every asset class included in the pattern of investment notified by the Central Government but restricted to public sector funds.
The FIAC, in its meeting today, is likely to further deliberate on the government’s proposal on investing up to 5% of the EPFO’s incremental income in AIF, including InvITs.
According to the notified investment pattern, the EPFO can invest its incremental deposits amounting to about Rs.1.8 lakh crore yearly, between 35-45% in debt instruments, 45%-50% in government securities, between 5-15% in equities, up to 5% in short-term debt instruments, and up to 5% in trust-structured, asset-backed and miscellaneous investments.
Last April, the government modified the trust-structured, asset-backed, and miscellaneous investment category to provide for investment in units issued in Category I and Category II AIFs regulated by the SEBI. However, the EPFO has not exercised these options so far. The advisory body might also deliberate framing Standard Operating Procedures (SOPs) for exiting investments made in equities and other instruments.
Last year, the government allowed up to 5% investment in trust-structured, asset-backed and miscellaneous investments, including real estate investment trusts, AIFs, and units of InvITs, which paved the way for the EPFO to expand its investment basket to maximise returns.
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