Four AMCs to manage EPF corpus

It is a good news for over four crore employees who are the part of Employees’ Provident Fund Organisation (EPFO) as this time the Central Board of Trustees (CBT) of EPFO has opted multiple fund managers in stead of one for better managing the fresh additions of the EPF corpus but amid controversies.

CBT has selected four Asset Management Companies (AMCs) – HSBC AMC, ICICI Prudential AMC, SBI and Reliance Capital AMC- for managing the Rs. 30,000-crore corpus of one of the largest public sector assets.

The Finance and Investment Committee (FIC) of CBT-EPFO had sort listed the four AMCs according to ‘Management Fee’ quote. The FIC has decided to distribute the amount of EPFO among the chosen AMCs at inversely proportion basis; means ‘quote less management fee and get largest slice of corpus’. However, the quote of zero percent or near zero percent of bid would be declared ‘invalid’ due to technological reasons.

HSBC AMC had got the largest share of EPF corpus amounting Rs. 9,677 crore as it has quoted the ‘Fund Managing Fee’ of 0.0063%. ICICI AMC got the second largest quantum of fund amount of Rs. 8,128-crore as it had quoted 0.0075% fee. SBI AMC and Reliance Capital each had quoted the same fund charges and also got the same portion of amount of Rs.6096-crore each.

However, the controversy begins when the fourth AMC entered in the short-list of FIC at the last movement, which was earlier ‘invisible’ as there were only three names in the list and it were the first three AMCs, as per sources said.

The other companies, which had quoted the less fund management fee, have raised the finger in sort-selecting process, sources said. The bidders HDFC AMC and Birla Sun Life AMC, UTI AMC and Kotak Mahindra AMC have protested the selection process and asked the FIC to clarify it. The first two were shortlisted after the technical evaluation round, but disqualified in the financial bidding round due to a ‘zero bid’.

Minister of state for labour and employment Oscar Fernandes, who had cleared the fund managers’ appointment last week, hold a meeting in PMO on Thursday with CBT. After the end of the meeting, Fernandes announced four names, which was unexpected earlier.

It is understood that the last-minute inclusion of Reliance Capital AMC in the sort-list is the result of UPA-SP (Samajwadi Party) friendship as Anil Ambani, the Chairperson of Anil Dhirubahi Ambani group, under which Reliance Capital comes, is closer to Amar Singh, Secretary of SP, who might have made pressure to UPA government of its inclusion.

However, these new four appointed fund management companies would break the monopoly of SBI, which had not shown better performance at the edge of fund managing of over 4-crores employees’ retirement fund and also charged heavy amount for it.

This time, SBI has too quoted competitive bid and again became successful to get the opportunity. This is the only public sector company that has got the chances of ‘fund managing’ among the four while rest of three are private sector AMCs.

The foremost credit rating agency of India CRISIL will monitor the ‘fund managing process. CRISIL have already examined the prudence of managing the corpus to multiple fund managers, on the request of EPFO.