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Hr NewsStatutory Compliance

EPFO laps up top-rated PSU bonds to deploy special deposits

Source | The Economic Times  : By Saikat Das

MUMBAI: The Employees’ Provident Fund Organisation (EPFO), which manages retirement funds for millions of Indians, has once again made good use of its year-end windfall from the government’s Special Deposit Scheme with an investment of nearly Rs 10,000 crore in top-rated corporate bonds clinching best possible rates.

EPFO invested in top-rated public sector bonds earning decent interest rates in the month of December, including Rural ElectrificationBSE 3.70 % Corp, Power FinanceBSE 2.40 % Corp, NTPCBSE -0.15 %, and National Bank for Agriculture and Rural Development (Nabard), the Central PF Commissioner’s office said in an email reply to ET.

“Special Deposits amount received becomes part of the investible fund, which is then invested by our discretionary fund managers as per market conditions and views taken by them,” the email said.

“The coupon (interest rate) varies as per the market rates.” It, however, did not elaborate on the details.

The central fund body earns an interest income of about Rs 4,700 crore from the government’s Special Deposit Scheme (SDS), while together with other standalone provident funds this may be more than Rs 12,000 crore. SDS yields about 8.7% annually, which accrues at the endbeginning of every calendar year. Other fund inflows for EPFO include the usual member contributions and other interest income.

Those triple-A rated corporate bonds, issued mostly in the last two weeks of December, have interest rates in the range of 7.23-7.54 per cent across 10-15 year maturities. These rates are relatively com pared with benchmark bonds, which now yield about 75-100 basis points less than the levels.

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