Central Board of Trustees, the apex decision making body of EPFO, in its meeting on 14th January is likely to approve proposal to appoint a consultant to start process for selection of new fund managers
The Employees’ Provident Fund Organisation’s (EPFO) is planning to decide next month on hiring a consultant for starting process of selection of new fund managers for its huge corpus of about Rs5 lakh crore.
According to agenda of a meeting of Central Board of Trustees’ (CBT), the apex decision making body of EPFO, the proposal for appointment of the consultant would be discussed and approved.
The consultant would also evaluate the performance of new fund managers and appoint a custodian and concurrent auditor for the EPFO. At present, ratings agency CRISIL is providing consultancy services to the EPFO.
The existing four fund managers of EPFO – SBI, HSBC AMC, Reliance Capital and ICICI Securities Primary Dealership – were appointed for three years beginning 1 September 2011.
Among the four managers, SBI manages biggest chunk of fund with 35% of corpus followed by ICICI Securities Primary Dealership at 25%. HSBC AMC and Reliance Capital manage 20% each.
In the last bidding, Reliance Capital had quoted a fee of 4 paisa per annum for managing Rs10,000, and was the second lowest bidder after ICICI Securities Primary Dealership which quoted a rate of 3 paisa.
SBI had quoted a price of Re1 per Rs10,000 per annum whereas HSBC AMC’s rate was 36 paisa.
The CBT had approved the appointment of Standard Chartered Bank as custodian of securities of EPFO and Chandabhoy and Jassoobhoy of Mumbai as external concurrent auditor for the body.
The EPFO had appointed multiple fund managers for the first time in July, 2008, for earning better rate of return on deposits for its over five crore subscribers.
During the two-and-half-year tenure from 17 September 2008 to 31 March 2011, ICICI Pru had provided highest yield (return) of 8.72% followed by HSBC AMC (8.64%), SBI (8.61%) and Reliance Capital (8.57%) against the benchmark yield of 8.52%.
Before July 2008, SBI was the sole fund manager for the retirement fund body since its inception in 1952.
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