The Employees' Provident Fund Organisation (EPFO) has raised over Rs 13,000 crore from the sale of exchange traded funds this fiscal year, allowing it to announce an interest rate of 8.25% for the current year. According to sources, the EPFO earned Rs 13,562.29 crore from the sale of ETFs between April 2023 and February 9 this year.
By December 31, 2023, the EPFO's holdings in equities and allied assets totaled Rs 1.37 lakh crore, accounting for 9.46% of its overall investment corpus of Rs 14.56 lakh crore.
In 2015-16, the retirement fund management began investing in equities through ETFs, starting with a 5% exposure of new deposits and gradually increasing to 10%. It is currently preparing to boost its exposure to 15%.
Its provisional investment holdings (at face value) in government securities were Rs 9.7 lakh crore, or 66.6% of its corpus, while its investments in debt instruments were Rs 3.47 lakh crore.
On February 10, the EPFO's Central Board of Trustees approved an interest rate of 8.25% for fiscal year 2023-24, the highest in three years. "Compared to the previous fiscal year, there has been tremendous growth. The revenue has climbed by more than 17.39%, while the principal has risen by 17.97%. This signals a good financial performance and potentially high rewards for members," an official release stated at the time.
The EPFO's net income available for distribution was Rs 1.07 lakh crore this fiscal year, compared to Rs 90,983.51 crore the previous year, when the EPFO faced a Rs 168.18 crore deficit to meet the 8.15% interest payout. Its interest on investments is expected to increase to Rs 1.04 lakh crore this fiscal year, up from Rs 90,104.56 crore last year.
The interest rate must now be approved by the Finance Ministry before it can be publicized. The interest can then be credited to subscribers' accounts. Officials from the Finance Ministry stated that they had yet to receive the Labour Ministry's recommendation on the interest rate.
