The Hindu Business Line : EPFO awaits norms to invest in equity markets

Even if the Central Board of Trustees allows it, the Employees Provident Fund Organisation (EPFO) would be constrained from investing in the equity market because the Labour Ministry has still not notified the revised guidelines for EPFO investments.

More than 15 months ago, in January 2005, the Finance Ministry had notified revised guidelines for investments by all non-government provident funds, superannuation funds and gratuity funds, allowing them to invest in the equity market.

According to rules, the Finance Ministry first issues the notification following which the administrative ministry concerned re-issues the notification to make the guidelines applicable.

Consensus on investments

Official sources said that the Labour Ministry would need to notify the revised guidelines under Para 52 of the EPF Scheme 1952.

During the past 15 months, the Central Board of Trustees (CBT) of the EPFO met several times and the issue of investing in the stock market had also been discussed; a consensus seems to be emerging on investments but with some guarantees. However, what remained unnoticed was that even if the CBT decided to go ahead and approve a change in the organisation's investment pattern, the EPFO would not have been able to reshuffle its investments accordingly.

Reshuffling of EPFO funds have become necessary as it failed to pay the interest rates recommended by the CBT and had to dip into its reserves last year to make up the shortfall.

Wasteful expenses

Meanwhile, wasteful expenditures incurred by the EPFO have come under fire from the auditors, particularly when it is struggling to pay its members' liabilities.

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