Private and public sector financial players qualify bid to manage provident fund

Leading private financial players HSBC and ICICI Prudential and the country's largest public sector bank SBI managed to qualify financial bid for managing about Rs 25,000 crore in provident fund of about four crore employees annually.

While giving the confirmation a member of the Finance and Investment Committee (FIC) of Employees Provident Fund Organization (EPFO) said, "Three asset management companies, including HSBC, ICICI Prudential and SBI have qualified in the financial bid round".

Earlier, when bid was announced 10 companies, including Reliance, Birla Sun Life, HDFC, had qualified in the technical round and later seven companies submitted financial bids.

A member of FIC of EPFO said HSBC and ICICI Prudential have quoted the lowest fee of one basis point, or 0.01 per cent, of the fund to be managed.

Regarding short listing of SBI, member said although the fee quoted by SBI and Reliance were almost same, but SBI was able to qualify the financial bid round as it had scored more points on technical grounds.

Three players selected by the FIC can be appointed to manage funds after Central Board of Trustees (CBT) gives its nod which is scheduled to meet on July 29.

The total amount of EPFO is around Rs 2, 40,000 crore with incremental deposits to the tune of Rs 25,000 crore every year.

In the beginning the EPFO will ask the fund managers to manage the incremental deposits only. Sources added once the private players are able to present better returns, they might be asked to manage additional funds.

The sources said this will help the EPFO to offer high interest rate to its subscribers as against 8.5 per cent at present.