Under its current mandate, the Employees Provident Fund Organisation (EPFO) can direct between 20% and 45% of its corpus into debt instruments issued by corporates, the government or multilateral institutions.
The new directive opens the door for exempted trusts to invest in rupee‑denominated bonds from four key lenders—International Bank for Reconstruction and Development, International Finance Corporation, Asian Development Bank and New Development Bank—provided the bonds have at least a three‑year maturity.
According to the Finance Ministry, roughly 1,000 exempted trusts, largely housed in public sector undertakings and representing about 30 lakh members, stand to diversify away from domestic corporate debt to more stable yields.
The change also reinforces existing limits that cap interest rates at no more than two percentage points above the EPFO's announced rate, a restriction that had previously been breached by some trusts.
A formal notification will be issued next week, after which trusts must re‑balance their portfolios; insiders say the shift could prompt a surge in applications for the new bond instruments.