EPFO calls meeting of CBT members to explain investment patterns, strategies

The Employees’ Provident Fund Organisation (EPFO) has invited the members of the Central Board of Trustees (CBT) to understand its investment patterns and strategies.

According to sources, the meeting scheduled for June 13 will familiarise members of the CBT with the modus operandi of investments by the EPFO.

“The EPFO is sitting on vast amounts of public money. As the custodian of these funds, it is the responsibility of the CBT to safeguard it and be aware and understand how these funds are invested and fetch a return that in turn leads to declaration of the interest rate,” said a person familiar with the development, adding that this is not a meeting of the CBT.

The CBT is the apex decision making body of the EPFO and is chaired by the Union minister for labour and employment and includes Central and state government officials as well employee representatives and trade union representatives as members.

In January, the government reconstituted the CBT after it completed its five-year term, and included several new members in it. Since then, the 42-member CBT has held one meeting in February in which it took a decision on the interest rate for 2023-24.  

The EPFO is the country’s second-largest non-banking financial institution after the Life Insurance Corporation of India and had total investments of Rs 13.04 lakh crore as of March 31, 2023. Under the current investment guidelines it can invest 45–65% of incremental accretions into the fund into Central government securities, between 20 and 45% in debt and related instruments, upto 5% in short-term debt instruments and between 5 and 15% in equities and related instruments.   

While a sub-committee under the CBT called the Finance and Investment Committee vets all finance and investment-related proposals, a final call is then taken by the CBT on all such issues including increasing the cap on equity investments, redemption of units of exchange-traded funds and also take a holistic picture of the EPFO’s finances to decide on the interest rate for the year.