EPFO’s apex decision making body Central Board of Trustee (CBT) is likely to appoint by the month-end a separate custodian for its securities which runs into thousands of crores of rupees.
“The EPFO trustees are likely to meet by this month-end to finalise the appointment of custodian for its securities (investment),” a source said.
In the present scenario, asset management firms managing Employees’ Provident Fund Organisation’s (EPFO) corpus also function as bankers and custodian of the retirement fund body.
EPFO wants to separate the three functions — custodian, fund management and banker service to keep “fund managers at arm’s length distance from custodians’’.
During the first stint of multiple fund managers from September 17, 2008 to March 31, 2011, SBI continued to keep the securities purchased by them with its own custodian unit.
The other three fund managers — ICICI Pru, Reliance Capital and HSBC AMC — appointed HDFC Bank as the custodian for the securities purchased by them for EPFO. The fee for the custodian service was paid by the three fund managers.
But now the EPFO wants to directly have a custodian and has incorporated the clause in its bid document for the appointment for fund managers.
The EPFO appointed selection committee had issued request for proposal (RFP) to all the 19 such entities (custodians) registered with the Securities and Exchange Board of India.
According to sources, the technical bids for appointment of custodians have already opened on July 15 and the financial bids would be unsealed on July 19.
EPFO wants to appoint the custodian for a term of three years in synchronisation with the tenure for multiple fund managers beginning September 1 this year.
The retirement fund body had appointed SBI, ICICI Securities Primary Dealership, HSBC AMC and Reliance Capital on Thursday for a three-year term beginning September 1.