Mumbai: The government has allowed managers of the employees provident fund, pension and gratuity funds to invest up to 15 per cent of the fund in the stock market.

The move, that comes nearly a fortnight after the government ended the monopoly of SBI in managing EPF accounts, would help channel the incremental funds flowing into the EPF corpus into the sagging capital market.

Under the revised guidelines, effective next financial year starting 1 April 2009, the government also relaxed norms regarding investment in securities as part of its financial sector reform programme.

Under the revised guidelines issued by the finance ministry, the PF managers can invest up to 15 per cent of investible funds in shares of companies on which derivatives are available in the Bombay Stock Exchange or the National Stock Exchange.

The Employees Provident Fund has a corpus of over Rs2,40,000 crore. The government on 30 July allowed private sector HSBC, Reliance Capital and ICICI Prudential to manage the incremental funds of EPFO, subscribed by over four crore employees.

The government would also press upon the Central Board of Trustees of the Employees Provident Fund to follow the new investment guidelines.
 
The finance ministry had, in September 2007, proposed to double the capital market exposure for provident funds, superannuation funds and gratuity funds from the existing five per cent to 10 per cent.

Besides, it also proposed to reduce the amount that the funds need to invest in government securities from 40 per cent to 35 per cent.