ICICI Prudential, SBI and HSBC have emerged the frontrunners to manage incremental contributions to Employees’ Provident Fund, a government official said on Tuesday, a day after opening of the financial bids for the same.
There are six fund houses, including the above three, which have bid to manage the funds for a fee of less than 0.01 per cent, or one basis point. That means if a fund house gets to manage Rs 5,000 crore, it would get Rs 50 lakh or less as fee for this.
“We will take a decision by Tuesday night or Wednesday,” said an official at Employee Provident Fund Organisation (EPFO), who did not wish to be named.
The management is trying to be cautious on the selection so as to avoid any kind of conflict later on.
“We would formally propose names of selected fund houses to the financial committee on July 24,” said the official. The committee will “then take the final call.”
Ten fund managers, out of a total 17, made it through the technical evaluation round. Financial bids were opened on Monday.
The EPFO has also decided that fund management fee will be paid only on incremental accretion received by a fund house and not on the total assets under management (AUM). This means that if a fund house receives Rs 5,000 crore in the first year and Rs 6,000 crore in the second year, then fee payable in the first year would be applicable on Rs 5,000 crore and only on Rs 6,000 crore in the second year.
“We have moved out of paying on the total AUM and will pay only on incremental accretion. We are the first ones to do so,” said the EPFO official.