The Government has made changes to the investment pattern for private provident funds, superannuation and gratuity funds.
The gazette notification issued by the finance ministry has allowed them to invest up to 5 percent in alternate investment funds (AIFs) regulated by the Securities and Exchange Board of India (Sebi).
As per the notification, these funds have to comply with certain conditions for investment, such as size and class of AIFs, and investment concentration. Some of the conditions provide that investments should be in those AIFs that support infrastructure, Micro, small and medium enterprises (MSMEs), venture capital, and social welfare.
Additionally, the new investment guidelines state that funds have to ensure that investment isn’t made directly or indirectly in securities of companies or funds incorporated and/or operated outside India.
These changes are part of the central government’s strategy to channelize domestic savings and improve their returns to attract more investment in the said sectors.