EPFO withholds investments into corporate bond market

EPFO withholds investments into corporate bond market

Employees' Provident Fund Organisation (EPFO). File photo

Employees' Provident Fund Organisation (EPFO) has decided to withhold any further investments into the bonds of private companies amid growing concerns over stability in the Indian bond market.

"The Central Board of Trustees (CBT) approved the decision to withhold any further investment in private sector companies bonds and to compulsorily consider one of the two required ratings necessarily from CRISIL, CARE, ICRA, and India Ratings for investments in PSU Bonds category," EPFO said in a statement.

The move comes at the time when India's corporate debt market is at the brink of crisis. There has been an increasing number of defaults in the market during the past seven months. Also, more than 100 companies have been facing a difficult time refinancing their debt.

The board of the organisation has also ratified the decision of put option in non-convertible debentures (NCDs) of Tamil Nadu Power Finance Corporation and also approved put option in a bond issued Kerala Finance Corporation and Tamil Nadu Power Finance and Infrastructure.

The Board approved for early redemption option in crisis-hit Dewan Housing Finance (DHFL) bonds recommended by Finance Investment and Audit Committee (FIAC).