The Employees' Provident Fund Organisation (EPFO) has no plans to increase its investment limit into India's stock exchange traded funds (ETF), Labour Minister Bandaru Dattatreya told Parliament on Monday.
The expectations that the retirement-corpus guarding entity could increase its limit from 5 percent to up to 15 percent into such exchange traded indexed funds remained just that.
In a written reply to the Lok Sabha on Monday, Dattatreya said that "at present there is no proposal under consideration of the government to enhance this limit." The retirement fund's central board of trustees (CBT) has only agreed to continue with 5 percent investments into ETF, but hasn't proposed any further increase.
The CBT was expected to meet sometime before July 22. Also, both the labour minister and the finance ministry had granted an in-principle approval to extend investment into India's equities market.
PTI reported that Dattatreya had said the "quantum of investment to be made into ETF" would increase after the organisation had discussions with both the Bombay Stock Exchange and the National Stock Exchange, while the finance ministry too had cleared a proposal for investment between 5 to 15 percent into equities through these ETFs. Dattatreya held that such an approval is for long term investment, while "it may be may be up to 10 to 12% depending upon the market conditions."
Investments into ETF began a year ago and, as of June 30, the EPFO had invested Rs. 7,468 crore in two index-linked ETFs -- one on both the exchanges. The present market value of the investment stood at Rs. 8,024 crore, which was 7.45 percent return on investment.
The EPFO is a statutory body under the labour ministry.