EPFO decision on hiring new fund managers in Jan

New Delhi: Retirement fund manager EPFO will take a decision next month on hiring a consultant for initiating process of selection of new fund managers for its huge corpus of about Rs 5 lakh crore.

According to agenda of the Employees' Provident Fund Organisation's (EPFO) apex decision making body Central Board of Trustees' (CBT) meeting scheduled on 14 January, the proposal for appointment of the consultant would be discussed and approved in the meet.[caption id="attachment_1309795" align="alignleft" width="380"] New fund manager soon. Andrew Middleton/Flickr[/caption]

The consultant would also evaluate the performance of new fund managers and appoint a custodian and concurrent auditor for the EPFO.

At present, 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 a term of three years beginning 1 September 2011.

Among the four managers, SBI manages biggest chunk of fund with 35 percent of corpus followed by ICICI Securities Primary Dealership at 25 percent. HSBC AMC and Reliance Capital manages 20 per cent each.

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In the last bidding, Reliance Capital had quoted a fee of 4 paise per annum for managing Rs 10,000, and was the second lowest bidder after ICICI Securities Primary Dealership which quoted a rate of 3 paisa.

SBI had quoted a price of Re 1 per Rs 10,000 per annum whereas HSBC AMC's rate was 36 paise.

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 percent followed by HSBC AMC (8.64 percent), SBI (8.61 percent) and Reliance Capital (8.57 percent) against the benchmark yield of 8.52 percent.

Before July, 2008, SBI was the sole fund manager for the retirement fund body since its inception in 1952.

PTI