Govt may allow 10 per cent of PPF in stocks

Government may double the ceiling of retirement funds managed by private organisations for investing in listed companies, a move that could further boost the already bullish stock markets. According to the sources, the Finance Ministry is likely to take a final decision, next week, on allowing private provident funds, superannuation funds and gratuity funds to invest up to 10 per cent of their funds in listed shares. "We have invited public comments on the proposed investment pattern for non-government provident funds, and would take a decision in this regard next week after studying the comments," said a senior Finance Ministry official on Friday.
If these guidelines are followed by private provident funds that have an aggregate investible amount of nearly Rs 300,000 crore, then employees could expect higher yield on their savings as against the present rate of 8.5 per cent. This is more likely to happen, since the stock markets have given an average of 25-40 per cent returns in recent years.
The official even stated that, the investment pattern guidelines for non-government provident funds would be revised almost after two-and-a-half years.
Meanwhile, the Finance Ministry has proposed that provident funds operated by firms could be allowed to invest their funds in shares of companies that have an investment grade debt rating from at least one credit rating agency or companies listed on BSE Sensex or NSE NIFTY 50, besides in equity linked schemes of mutual funds regulated by Securty Exchange Board of India(SEBI).
Source:- http://www.headlinesindia.com/business