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The EPFO fund flow into the stock markets is not without riders. If it doesn’t give the desired results, the government might cap the fund flows to the stock markets.
The government has asserted that it would take a call on the fund flow (to stock markets) after reviewing the performance of the monies invested in the first tranche.
It has also made it clear that if the performance was not encouraging, it would limit the amount. “We are releasing the funds in instalments. We have released 3-4 instalments (out of the ₹5,000 crore for 2015-16) so far.
“The fund managers are managing it well. If results are encouraging, we will continue the flows. If it is not encouraging, we will cap it,” said Union Minister of State for Labour Bandaru Dattatreya here on Sunday.
The government gave the nod to EPFO to invest five per cent of the about ₹1 lakh crore deposits the EPFO received every year from its subscribers. This might go up to 15 per cent at a later stage. The Employees Provident Fund Organisation (EPFO) had begun the investment process early this month by choosing in the Nifty and Sensex Exchange Traded Fund of SBI Mutual Fund. About 75 per cent of the amount (₹5,000 crore) in the Nifty ETF, with the remaining 25 per cent in the Sensex’ fund.
Asked about the likely size of the second tranche, the Minister told BusinessLine that it was difficult to indicate a number at this juncture.
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