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State Bank of India, ICICI Securities Primary Dealership, Reliance Capital and HSBC Asset Management will manage the Rs 3.5 lakh crore-retirement corpus for three years, beginning September 1, 2011.
The decision was announced on Thursday by the Central Board of Trustees, the tripartite decision-making body of the Employees Provident Fund Organisation (EPFO).
The selection was done after evaluating the bids on both financial and technical grounds. Eighty per cent weightage was given to technical qualifications and 20 per cent to financial quotations, an official release said.
Expressing hope of getting good returns for close to 5 crore provident fund depositors this year, the Union Labour Minister, Mr Mallikarjun Kharge said, “We will see their performance for one year, and based on that, an appropriate decision will be taken by the trustees for extensions.”
Sources said ICICI Securities had quoted the lowest rate of 3 paise annually for managing Rs 10,000. Reliance Capital quoted a rate of 4 paise, HSBC AMC 36 paise and SBI Re 1.
Three of the selected fund managers were appointed last year, too. The only one to be dropped is ICICI Prudential, which was among the five whose financial bids were opened this year.
Last year, all four fund managers had given returns higher than the benchmark of 8.52 per cent, Mr Kharge told reporters. ICICI Pru yielded a return of 8.72 per cent, followed by 8.64 per cent by HSBC, 8.61 per cent by SBI and 8.57 per cent by Reliance Cap from September 17, 2008 to March 31, 2011.
“This year's benchmark will be fixed on the basis of daily market rates by CRISIL”, Mr Kharge said. The consultancy firm was appointed by EPFO to assist in appointing fund managers.
Among the four, SBI will manage 35 per cent of the funds, followed by ICICI Securities with 25 per cent. HSBC AMC and Reliance Capital will manage 20 per cent each, an official said.
A total of 11 bidders, including Kotak Mahindra AMC, Securities Trading Corporation of India, UTI AMC, Birla Sun Life AMC and Franklin Templeton AMC, are said to have evinced interest in managing the funds. However, only 10 were eligible for the issue of Request for Proposal document, Mr Kharge said.
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