Thousands of crores of rupees of additional money could be headed into the equity market after over two dozen provident funds come under the Employees Provident Fund Organisation (EPFO).
The government recently issued a notification under which retirement plans covered by the Provident Funds Act, 1925, will now be regulated by the labour ministry through EPFO. This means a portion of the deposits with these funds could now be invested in stocks, as per the pattern followed by the EPFO.
Provident funds under the PF Act, 1925, include the State Railway Provident Fund, the Shipping PF, the Coal PF, the Banking PF, the All India Services PF, the Indian Ordnance PF, the Indian Naval Dockyard PF, the Defence Services PF, the Armed Forces Personnel PF, the University PF and PFs of municipalities.
The combined size of these funds is almost same as that of the EPFO, which has about Rs10 lakh crore. However, General Provident Fund will not come under EPFO as the entire amount goes to Consolidated Fund of India and its subscribers are compensated on retirement or in a contingency, as prescribed by GPF rules.