EPFO to appoint custodian for securities on Jul 27

EPFO's apex decision making body Central Board of Trustees will meet on July 27 to appoint a separate custodian for its securities which run into thousands of crores of rupees.

"The 196th meeting of CBT will be held on July 27 at Bengaluru to consider the deferred agenda of 195th meeting (of EPFO trustees) held on July 14," an official communique to EPFO trustees stated.

Last Thursday, the CBT headed by Labour Minister, had deferred the discussion on the issue of appointing a seperate custodian for its securities.

The trustees would meet at the regional office of the EPFO in Bengaluru, the capital of the Labour Minister Mallikarjun Kharge's home state Karnataka.

In the present scenario, asset management firms managing Employees' Provident Fund Organisation's corpus also function as bankers and custodian of the retirement fund body.

EPFO wants to separate the three functions -- custody, fund management and banker service to keep 'fund managers at an arm's length from custodians'.

During the first stint of multiple fund managers from September 17, 2008 to March 31, 2011,

SBI continued to keep 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 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 appointment for fund managers.

EPFO appointed selection committee had issued request for proposal to all the 19 such entities (custodians) registered with Securities and Exchange Board of India.

According to sources, the technical bids for appointment of custodians has 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 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.