To allocate the incremental accretion to Employees Provident Fund (EPF) of Rs 30,000 crore among the four selected fund managers, the government appears to have worked out a formula.

The corpus that is to be assigned to each player would be in accordance with their quoted fund management fee. The lower the fee quoted by the player, the higher the quantum of funds to be managed by it, informed an official source close to the development.

Going by this criterion, the biggest gainer would be HSBC AMC, which had quoted the lowest fee of 0.0063 per cent and is likely to be assigned around Rs 9,677 for its fund management pool. The second biggest chunk of the EPF pie — around Rs 8,128 crore — would go to ICICI Prudential, which had quoted a fee of 0.0075 per cent.

Of the remaining Rs 30,000 crore, equal amounts will be allocated to Reliance Capital and State Bank of India, estimated at Rs 6, 096 crore each. However, the annual management fee works out to be the same for each of these players at approximately Rs 60.96 crore.

In all, Employees Provident Fund Organisation will pay a total management fee of Rs 241.87 crore per annum to these four fund managers. Experts point out that the amount is Rs 1.5 crore less than what the Employees Provident Fund Organisation paid as management fee to the erstwhile sole fund manager, State Bank of India.

Private fund managers, meanwhile, are upbeat on being allowed to enter SBI’s domain. For the four crore EPF subscribers, it would mean a significant opportunity to gain from improvement in current returns, said Reliance Capital AMC CEO Vikrant Gugani.

... contd.