The Hindu Business Line : PF funds

This refers to ‘Provident funds may get greater exposure to stocks’ (Business Line, September 15).The decision to enhance the investment limit from 5 per cent to 10 per cent would ensure more returns for the Provident Fund corpus. As the stocks are picked up on the recommendations of two credit rating agencies, the attendant risk should be reduced to a large extent.

A small part of the PPF and pension funds should also be considered for investment on similar lines for ensuring more interest to the subscribers of PPF and to control erosion of the corpus funds in respect of pension. The authorities should ensure full protection of the capital so invested and ensure attractive returns, through good churning of portfoliosIn fact, the gains generated in the stock and commodities markets do not get exploited by the government deployable funds, such as PF, pension or gratuity, as the present system does not envisage such a provision. Here, the losers are mainly the subscribers who are offered meagre returns. One need not take cues from what happened to UTI years back, when the regulatory system was not that effective. With a good regulatory system in place, Indian markets are poised to notch up larger gains in the coming years. So there is no need for too much hesitation from the managers of such funds to participate in the ongoing rallies to tap good gains.

Political theories should give way to a practical approach as there is nothing illegal or speculative about doing business in stocks or mutual funds.

Those parties who object to the gainful deployment of funds should reconsider their stand and, instead, should insist on strengthening the regulatory parameters to ensure good returns to the investing work-force.

C. P. Velayudhan Nair Kochi

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