The Employees’ Provident Fund Organisation (EPFO) has raised over Rs 13,000 crore from sale of exchange traded funds this fiscal, which has helped it to announce an interest rate of 8.25% for the current fiscal. According to sources, the EPFO received Rs 13,562.29 crore as income from the sale of ETFs between April 2023 and February 9 this year.
In all, the EPFO’s holdings in equities and related investments stood at Rs 1.37 lakh crore by December 31, 2023, constituting 9.46% of its total investment corpus of Rs 14.56 lakh crore.
The retirement fund manager had begun investing in equities through ETFs in 2015-16 with an initial exposure of 5% of incremental deposits, which was later increased to 10%. It is now planning to further increase its exposure to 15%.
Its provisional investment holdings (at face value) in government securities was Rs 9.7 lakh crore, which is 66.6% of its corpus and its investments in debt instruments was Rs 3.47 lakh crore.
On February 10, the Central Board of Trustees of the EPFO announced an interest rate of 8.25% for the fiscal 2023-24, which was the highest in the last three years. “Comparing to the previous financial year, there has been significant growth. The income has grown by more than 17.39%, while the principal amount has increased by 17.97%. This suggests a healthy financial performance and potentially strong returns for the members,” an official release had said at the time.
The EPFO’s net income available for distribution was Rs 1.07 lakh crore this fiscal as against Rs 90,983.51 crore in the last fiscal, when the EPFO had to face a deficit of Rs 168.18 crore to meet the interest payout of 8.15%. Its interest on investments is seen to rise to Rs 1.04 lakh crore this fiscal from Rs 90,104.56 crore a year ago.
The rate of interest now has to be approved by the Finance Ministry, which will then be notified. The interest can then be credited into subscriber accounts. Finance ministry officials had indicated that they are yet to receive the proposal from the labour ministry on the interest rate.