Retirement fund body EPFO today decided to appoint separate custodians of its investments and extended the deadline of appointment of fund managers by two months to August 31.
Employees' Provident Fund Organisation (EPFO) has taken the measure to separate custodial services from the fund managers to bring further transparency in the management of its huge corpus of Rs 3.5 lakh crore.
EPFOs apex decision making body Central Board of Trustees (CBT) took the call on the issues in a meeting here.
Apart from this the board has also decided to refer the report of the working group on comprehensive amendment to the Employees' Provident Funds and Miscellaneous Provision Act 1952 to Labour Minister for further examination.
"The board deliberated upon a proposal for further extension of the selection process of new fund managers for a period of two months effective from July 31," Labour Minister Mallikarjun Kharge told reporters here after the board meeting.
Kharge who is also heading CBT, informed, "Till the appointment of fund managers the State Bank of India would continue to manage the EPFO corpus."
The minister also informed about separating the custodial services from the fund managers and referring the overhauling of provident fund law to Labour Ministry.
The EPFO had to appoint multiple asset management companies (AMCs) by June 30, so that the newly appointed managers could take over its fund by July 1 for a three-year period, as desired by the CBT.
EPFO has already missed a deadline of March 31 this year, the day on which the term of four fund managers, including ICICI Pru, HSBC AMC, Reliance Capital and SBI expired. It had planned to appoint new fund managers for next three financial years beginning April 1.
Since EPFO could not appoint new AMCs well in time, the CBT in its meeting on March 30 this year had decided that SBI would manage its entire corpus for a three-month period ending June 30 as an interim arrangement.
During the months of April and May, SBI earned 9.64 and 9.23% respectively yield of investments made by it on EPFO's behalf against the benchmark 8.81 and 9.04%.
On June 6, giving reasonable time for submitting technical and financial bids, the EPFO had asked the 10 AMCs, who had earlier evinced an interest in managing its funds to submit their bids by June 24.
While the technical bids opened today, the financial tenders would be opened on July 8. Therefore, the appointment of AMCs by EPFO is not possible by this month-end.
Besides the four AMCs, who had managed EPFO corpus, seven new firms, including Kotak Securities, Securities Trading Corporation of India, UTI Securities and ICICI Securities, have expressed interest in managing the retirement fund corpus.
EPFO had appointed four fund managers for the first time in July 2008, with the objective of providing a better rate of return on deposits to its 4.72 crore subscribers.
Prior to this, SBI was the sole fund manager for it since its inception in 1952.
