The monopoly of the state-owned State Bank of India in managing provident fund totalling about Rs 2.5 lakh crore (Rs 2.5 trillion) on Tuesday ended with government allowing three private players including ICICI and HSBC a piece of the cake.
The Anil Ambani group firm Reliance Capital is the third private player that would share the management of the provident fund that is deducted from the salaries of about 4 crore (40 million) workers in the government and organised sector.
"The Central Board of Trustees have decided to allow Reliance Capital, ICICI Prudential, HSBC and SBI to manage provident fund of employees," Labour secretary Sudha Pillai told reporters after the meeting of trustees in New Delhi on Tuesday.
Asked if the finance and investment committee of the employees Provident Fund Organisation had shortlisted just three players managing the fund, she said that ten financial bids were taken by the government and based on this four companies have been given the mandate.
However, D L Sachdeva, a member of the Central Board of Trustees said that only three players were cleared by the committee but Reliance Capital is a later on addition.
HSBC emerged as the lowest bidder for the fund followed by ICICI Prudential, SBI and Reliance Capital, officials said, adding that allocation of fund for the management to the successful bidders based on the asset management fee would be taken by the finance and investment committee.
The meeting, was chaired by Labour Minister Oscar Fernandes, took the decision amid protests by representatives of labour unions affiliated with Left parties.
Analysts said that the entry of private players may help EPFO to offer high interest rate to its subscribers as against 8.5 per cent at present.
