The government plans to freeze the existing corpus of Post Office Insurance Fund and convert the Rs 10,000 crore-plus amount in this fund to dated securities over a period of three years. This means, banks, FIs, insurance companies, primary dealers, mutual funds, provident funds & trusts and big corporates, may all soon be able to invest in these securities as long-term investments.
As first reported by ET, all future accretion to the Post Office Insurance Fund will be invested in the markets as per Irda regulations. In December 2007, the Cabinet had approved the proposal to allow Postal Life Insurance Fund (POLIF) and Rural Postal Life Insurance Fund (RPOLIF) to enter markets through investments in public sector mutual funds. The Cabinet had appointed UTI MF and SBI MF as managers for the POLIF. Put simply, only the new investments into the Post Office Insurance Fund will be invested by the UTI and SBI and not the existing corpus. At the same time, the government has decided to follow a three-step process to ensure proper utilisation of funds. First, the funds will be given to fund managers under ‘passive’ or ‘non-discretionary’ mode for investment as per Irda (Investment) Regulations, 2000. Secondly, an investment board will be constituted headed by member (I&FS), postal services board and consisting of other members such as financial experts, actuary and joint secretary of ministry of finance. The board will be the apex body for the purpose of laying down the policy guidelines and investment strategy, which will set the framework for the day-to-day decision on investment. There will be a chief investment officer, to head the division. He will execute the policy framework and structure of the investment decided by the investment board,” said minister of state for communications and IT Shakeel Ahmad in a written reply to an unstarred question in the Lok Sabha.
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