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3-5% of EPFO Corpus Stock Market-Bound

EPFO is looking to generate greater returns from the huge fund corpus at their disposal

The government sure seems to be very serious about improving the flow of funds into capital markets from subscribers of retirement funds.

In a fresh directive, it wants the Employees Provident Fund Organisation (EPFO) to initiate the process of parking around 3-5 per cent of the retirement fund of the subscribers in stocks.

Through this, the government believes that the flow of funds into capital markets can shoot up to a whopping Rs 13,000 crore, reports Mint.

The decision was taken during the Central Board of Trustees (CBT) meeting which is the apex decision making body of the EPFO.

The logic here, ministry officials said, was that the EPFO would have negligible risks and get healthy returns if investments in stock indices are done on a long term basis.

The ministry had come out with the new investment pattern last year in August. This came just after the move to allow managing of funds by  private players like HSBC, Reliance Capital and ICICI Prudential.

The EPFO has also selected State Bank of India for this purpose.

The EPFO, manages provident fund accounts of about 4.5 crore subscribers and it has a corpus of Rs 2.57 lakh crore.