New Delhi: The central board of the Employees’ Provident Fund Organisation (EPFO) on Wednesday decided to appoint two asset management companies UTI AMC and SBI Mutual Fund, as its fund managers for three years and reiterated its commitment to pay an interest rate of 8.65% for 2018-19 despite the reservations of the finance ministry.
“Our investment finance committee had recommended the names of fund managing firms after due diligence over the last couple of months and the board approved the proposal," said Michael Dias, a central board member of EPFO.
The finance, audit, and investment committee (FAIC), had suggested the name of UTI AMC, and SBI Mutual Fund, from a list of six firms, according to the agenda note seen by Mint.
The appointment of fund managers for a term of three years has been pending with the retirement fund manager for more than 16 months. The funds were being managed by SBI, ICICI Securities Primary Dealership, Reliance Capital and HSBC AMC since April 2015.
The fund managers invest 85% of the EPFO money in debt investments and the remaining 15% in equity through exchange traded funds (ETFs). The new fund managers will be the custodians of the EPFO corpus and its investments from October this year. Every year, EPFO gets deposits of more than ₹1.2 trillion from its subscribers.
In end-March, SBI said that as a bank it cannot be a fund manager and hence ceased to be a fund manager of EPFO from the current financial year. Later, SBI’s asset management firm, SBI Mutual Fund, submitted bids and was selected as one of the fund managers. The performance of a portfolio manager is key to getting good returns on EPFO investments.
Dias said that EPFO officials and the labour ministry also reiterated the commitment to pay 8.65% rate of interest to the subscribers.
“The ministry is not going back on the interest rate announced and said that they are confident of the finance ministry giving them a go ahead soon," he said after the meeting in Hyderabad.