The Employees Provident Fund Organisation (EPFO) is working on guidelines to enable investments in (AIFs), five years after the government cleared the retirement body’s entry into these high-growth asset classes and startups, The Times of India reported on Thursday.




The Securities and Exchange Board of India (SEBI) discussed a proposal to allocate up to 3% of EPFO’s fresh annual accretions to Category I and Category II AIFs at an investment committee meeting last Thursday, the report said.




The move could mark a shift in how the retirement fund body deploys workers’ savings, allowing it to gain exposure to startups and other growth-oriented investments beyond its traditional debt instruments.




The proposal will now be placed before the central board of trustees, headed by Labour Minister Mansukh Mandaviya, in November, according to the report.




The development follows a September letter from the Department for Promotion of Industry and Internal Trade (DPIIT) seeking EPFO’s participation in the recently launched 2.0.




The proposal prompted discussions on a broader framework for investments in AIFs, the report added.




Initially, EPFO is considering routing investments through institutional entities such as the National Investment and Infrastructure Fund (NIIF) and the Small Industries Development Bank of India’s (SIDBI) Startup India Fund of Funds 2.0.




Under the investment pattern notified by the finance ministry, EPFO can invest up to 5% of its fresh accretions in asset-backed and trust-structured investments. It has not yet invested in SEBI-regulated Category I and Category II AIFs.




Category I AIFs typically support startups, small businesses, infrastructure and venture capital, while Category II funds include private equity, real estate and private debt funds.




The proposed framework includes safeguards such as a minimum AIF corpus of Rs 100 crore, limits on exposure to individual funds, restrictions on investments in foreign-incorporated entities and requirements for fund manager independence.




EPFO manages around Rs 30 lakh crore in retirement savings for nearly 30 crore members, the report said.