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EPFO plans to invest in AIFs, startups, says report

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In short

The Central Board of Trustees is scheduled to review a proposal in November allowing up to 3% of fresh annual accretions to enter Category I and Category II alternative investment funds. To maintain safety, initial allocations will likely pass through established state-backed platforms like SIDBI’s Startup India Fund of Funds 2.0 and the National Investment and Infrastructure Fund. This move represents a major portfolio shift for the retirement body, which currently manages Rs 30 lakh crore for 30 crore members without any prior exposure to these specific fund classes. Strict eligibility criteria, including a Rs 100 crore minimum corpus and promoter independence, will be enforced to limit d…

Key points

  • The retirement fund aims to diversify beyond traditional debt securities to secure higher…: The retirement fund aims to diversify beyond traditional debt securities to secure higher long-term yields for its 30 crore members.
  • Initial exposure will be minimized by routing alternative investments through reputable s…: Initial exposure will be minimized by routing alternative investments through reputable state vehicles such as the NIIF and SIDBI.
  • The intended 3% allocation complies with the Finance Ministry's overall 5% ceiling for as…: The intended 3% allocation complies with the Finance Ministry's overall 5% ceiling for asset-backed and trust-structured financial instruments.

Sources checked by our analysis pipeline: 1

The government allowed the Employees' Provident Fund Organisation (EPFO) to invest in alternative investment funds (AIFs) five years ago. Now, the provident fund body is working on rules about how it can invest in AIFs and startups, as per a Times of India (ToI) report.

A proposal to allocate up to 3% of the EPFO’s new annual accretions into the Securities and Exchange Board of India (Sebi)-regulated Category I and Category II AIFs was discussed in the investment committee (IC) meeting on Thursday (October 22, 2026), as per the TOI report. In September, the EPFO received a letter from the Department for Promotion of Industry and Internal Trade (DPIIT) requesting participation in the recently formed Startup India Fund of Funds 2.0.

The proposal is expected to be taken up by the Central Board of Trustees (CBT), chaired by Labour Minister Mansukh Mandaviya, in November, as per the report.

If approved, the move would allow the EPFO to diversify part of its investments beyond traditional debt instruments and explore opportunities that could deliver higher returns over the long term. However, investments…

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