The Employees’ Provident Fund Organisation (EPFO) today selected four new fund managers—State Bank of India (SBI), ICICI Securities, Reliance Capital and HSBC Asset Management Company—for managing its corpus of Rs 3.5 lakh crore.
SBI will manage 35 per cent of the funds, ICICI 25 per cent, while the other two would manage 20 per cent each. SBI used to be the sole fund manager for the retirement fund body before multiple fund managers were appointed in 2008.
The decision was taken by the Central Board of Trustees (CBT), EPFO's apex decision making body, after a debate on whether the fee charged by the entities should decide the portion of funds allocated to them.
It was earlier proposed that ICICI would be given 35 per cent of the funds, while SBI would get to manage 10 per cent, as the latter charged the highest service fee. The country's largest lender charges Rs 1 per annum for managing Rs 10,000, while the rates quoted by other companies are much lower. This raised the question on whether SBI should not be given a smaller portion of the funds.
However, members intervened to say that SBI provided technical details to the fund management which added to the quality of their work. Hence, the fee alone cannot be the basis for deciding this. Both Labour Minister Mallikarjun Khadge and Labour Secretary P C Chaturvedi supported this, saying qualitative merits of SBI should be given due weight and fee should not be the sole criterion for apportioning funds, CBT member D L Sachdeva told Business Standard.
ICICI Securities is the only new entrant to the list, while ICICI Prudential has been excluded from the previous list of four companies managing the corpus till March 31.
