New Delhi: More than two years after the Employees Provident Fund Organisation (EPFO) Board’s finance and investment committee (FIC) called for replacing State Bank of India’s (SBI) monopoly over its fund management with a regime of multiple fund managers, the FIC, on Thursday decided to recommend to the board the names of HSBC, ICICI Prudential Asset Management Company and SBI as the new fund managers for EPFO.
In yet another sign of the Right aligning with the Left, BM Rai of the BJP-backed Bharatiya Mazdoor Sangh (BMS) is learnt to have echoed the views recently expressed by his CITU peer W R Varadarajan and called for the fund managers to be picked from the public sector alone. The Congress’ trade union INTUC president G Sanjeeva Reddy and Employers’ Federation’s Sharad Patil didn’t attend the meeting.
With the government keen to press ahead with the long-pending reform move, the committee cleared the three ‘selected’ names with the backing of employer representatives even as employee unions called for more discussions over the matter in the board meeting. The minister for labour and employment, Oscar Fernandes, will chair a meeting of the EPFO’s Central board of trustees summoned on Tuesday, July 29, to finalise the fund managers’ selection and initiate their appointment process.
Employee union reps are expected to oppose the government in the implementation of the decision. “The board may have to take a decision by majority vote rather than consensus,” a trustee told FE . Of the 21 bidders that had expressed interest in managing the corpus of EPFO, the second largest non-banking financial institution in the country after the Life Insurance Corporation of India , 10 players had been shortlisted for financial bids which were opened on Tuesday.
The surprising bids by HDFC AMC and Birla Sun Life AMC, to manage EPFO’s monies at zero fees, threw the EPFO in a tizzy. A legal opinion had to be sought on whether a legally binding contract can be entered into by the EPFO with a bidder who quoted a ‘Nil’ financial bid. With its legal advisor pointing out that no valid contract can be signed if there is ‘no consideration’, HDFC and Birla Sun Life’s bids were rejected.
With those bids out of the way, HSBC AMC, ICICI Prudential AMC, SBI and Reliance Capital AMC had the lowest financial bids. With SBI and Reliance both bidding fees of just 0.01% of assets, SBI... was selected as it had a better score on technical bids’ evaluation (81 out of 100).
Reliance Capital’s technical bid evaluation score was 77 out of 100. It’s another matter that the entire exercie of replacing SBI as EPFO’s sole fund manager was taken up due to the growing realization that it had delivered sub-optimal returns in recent years, idled EPFO funds and often invested them in its own term deposits. Board members also point out that SBI has now quoted fees which are much lower than what it currently charges EPFO.
In yet another sign of the Right aligning with the Left, BM Rai of the BJP-backed Bharatiya Mazdoor Sangh (BMS) is learnt to have echoed the views recently expressed by his CITU peer W R Varadarajan and called for the fund managers to be picked from the public sector alone. The Congress’ trade union INTUC president G Sanjeeva Reddy and Employers’ Federation’s Sharad Patil didn’t attend the meeting.
With the government keen to press ahead with the long-pending reform move, the committee cleared the three ‘selected’ names with the backing of employer representatives even as employee unions called for more discussions over the matter in the board meeting. The minister for labour and employment, Oscar Fernandes, will chair a meeting of the EPFO’s Central board of trustees summoned on Tuesday, July 29, to finalise the fund managers’ selection and initiate their appointment process.
Employee union reps are expected to oppose the government in the implementation of the decision. “The board may have to take a decision by majority vote rather than consensus,” a trustee told FE . Of the 21 bidders that had expressed interest in managing the corpus of EPFO, the second largest non-banking financial institution in the country after the Life Insurance Corporation of India , 10 players had been shortlisted for financial bids which were opened on Tuesday.
The surprising bids by HDFC AMC and Birla Sun Life AMC, to manage EPFO’s monies at zero fees, threw the EPFO in a tizzy. A legal opinion had to be sought on whether a legally binding contract can be entered into by the EPFO with a bidder who quoted a ‘Nil’ financial bid. With its legal advisor pointing out that no valid contract can be signed if there is ‘no consideration’, HDFC and Birla Sun Life’s bids were rejected.
With those bids out of the way, HSBC AMC, ICICI Prudential AMC, SBI and Reliance Capital AMC had the lowest financial bids. With SBI and Reliance both bidding fees of just 0.01% of assets, SBI... was selected as it had a better score on technical bids’ evaluation (81 out of 100).
Reliance Capital’s technical bid evaluation score was 77 out of 100. It’s another matter that the entire exercie of replacing SBI as EPFO’s sole fund manager was taken up due to the growing realization that it had delivered sub-optimal returns in recent years, idled EPFO funds and often invested them in its own term deposits. Board members also point out that SBI has now quoted fees which are much lower than what it currently charges EPFO.
Source: The Financial Express
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