This announcement of the government can prove to be very helpful for MSMEs and start-ups facing shortage of funding. Alternate investment funds can open up new avenues of funding.
The government has allowed private provident fund, superannuation and gratuity fund to invest five per cent of its surplus to be invested in Alternative Investment Fund (AIF). These alternative funds should support infrastructure, MSME, venture capital fund and social venture capital fund. With this, start-ups and small industries will be able to get funds easily. If the EPFO also followed this instruction of the government, then it would be easier to get funds from them. Start-ups and MSMEs in the country are struggling with shortage of funds. Therefore, this step of the government can prove to be very beneficial for them.
EPFO can also follow this path
The EPFO manages a retirement fund of Rs 12 lakh crore. But the new announcement that the government has made on Tuesday will only apply to private provident. An EPFO official said that although this may be a risky decision, it can be considered in a meeting of the Central Board of Trustees. In a notification issued by the government on Tuesday, it has been said that non-government provident funds, super annuity funds and gratuity funds can invest in category 1 and category 2 alternative investments. SEBI regulates the Alternate Investment Fund.
You can invest in a fund of more than 100 crore rupees
The government notification issued on Tuesday said that private provident funds, super annuities and gratuity funds can invest in such alternative investments, whose funds are at least Rs 100 crore or more. Investment in Infrastructure, SME, Venture Capital and Social Venture Capital Fund is permitted under Category 1. This will open new avenues for funding of MSMEs.
