Worldwide, countries such as United States, Australia, Canada, Japan, United Kingdom, Switzerland and Netherlands have allowed the pension funds to invest in equity, debt, currency and other asset classes.

Sebi is of the view that the sector's asset base has potential to grow to 20 lakh crore in next five years, from about 9 lakh crore currently. Finance Ministry had permitted EPFO way back in 2008 to invest up to 15 percent of its corpus in shares or equity linked schemes of mutual funds. However, due to probable risk aversion on part of the trustees of EPFO, investment in equity-oriented mutual funds is not being made currently.

Further, Labour Ministry last year superseded an earlier decision and specifically stated that no investment is allowed in equity and equity-focussed MF schemes. It is mandatory to have employee provident fund schemes for all workers earning up to 6,500 a month. Sebi, however, said that a majority of contribution in EPFO corpus comes from high-end workers for tax benefits and assured returns. Sebi has suggested that the allocation to MF schemes can be restricted to 20-25 percent of worker's contribution, while adding that a similar practice is there in the U.S.

READ MORE: RBI's Monetary Policy Review To Dictate Trend On Bourses

Indian Reinsurance Regulations to Affect Life Insurance Business