In a bid to boost the returns of Employees Provident Fund Organisation (EPFO), a part of the corpus have been allowed for investment in bonds of seven private firms that meet the new criterion of 'AAA' rating from at least two agencies, said a media report.
The report added that the labour ministry has approved the minutes while EPFO's Central Board of Trustees (CBT) already gave its nod.
According to the revised rules, a company to be eligible for EPFO investments needs not only to be 'AAA' rated but also be listed, earning profits for five years and have a net worth of Rs 3,000 crore. Also the seven firms which will meet get the EPFO investments should have declared at least 15 per cent dividend for five preceding years and the maturity period of its bonds should be at least 10 years.
As per EPFO, seven companies — ACC, Grasim Industries, Great Eastern Shipping, Reliance Capital, Reliance Industries, UltaTech Cement, and Larsen & Toubro — currently meet these criteria.
Besides, labour ministry may also soon notify the investment pattern of 2008 where investment of 40 per cent of the EPFO corpus in private- and public-sector bonds was allowed. The currently investment pattern relates to the one approved by finance ministry in 2003 which allows investment of 40 per cent in government securities, 30 per cent in public-sector bonds and 30 per cent in the rest (10 per cent of the last category set aside for private bonds).
EPFO had also picked up seven companies in 2006 when it had started investing in private bonds, on the basis of discretion and logic. These firms were HDFC, IDFC, IL&FS, LIC Housing Finance, HDFC Bank, ICICI Bank and Axis Bank, said the media report.