Provident Fund Committee Investment at K.M. College Available to Purchase

O.P. Sharma, Convener, Provident Fund (PF) Committee, Kirori Mal College, had to re-invest the amount to be received after the maturity of fixed deposits (FD) in Canara Bank, maturing on July 12, 2018 (INR 5.88 cr.) and on July 14, 2018 (INR 6.70 cr.). He wanted to reinvest the funds in bank FDs for more than a year but less than two years to earn the maximum interest possible, since the current market interest rate trends indicated a severe downfall of interest rates in the near future, but Ram Saran, Section Officer of the College, wanted to reinvest this money for less than one year since there would be a requirement of funds in the short term. However, given Saran's views, O. P. Sharma had to convince the committee members about the feasibility of his proposal for two-year FDs. The case will enable participants to identify the components of a financial investment decision making, investment analysis, evaluation of options and recommendation with the decision of investment plan.