Over a year after the Employees’ Provident Fund Organisation (EPFO) broke the State Bank of India’s monopoly in managing its Rs 2.7 lakh crore corpus, the country’s largest banker is feeling the heat from its private sector competitors. Latest statistics reveal that the SBI has delivered lower returns than the three private asset managers — HSBC, ICICI Prudential and Reliance Capital, appointed by the EPFO in September 2008.

Although all the four portfolio managers have delivered as much or more than the current 8.5 per cent EPF rate between September 17, 2008 and September 30, 2009, enabling the EPFO to make this year’s interest payment without dipping into its reserves for the first time since 2002-03, a performance evaluation report for the whole year showed that the SBI is lagging behind the others. While the SBI delivered the highest returns in the first six months after the EPFO inducted the private players — ie from September 2008 to February 2009 — its performance had slipped thereafter, the report prepared by Crisil Fund Services revealed. For the full year, HSBC delivered the best yields, followed by ICICI-Prudential, Reliance and SBI.

The SBI’s performance has been on the decline in the first two quarters of 2009-10, affecting its ranking. In fact, between April-June 2009, SBI was the only fund manager to have under-performed the benchmark yield. This is when it yielded the top spot to ICICI-Prudential.

The SBI’s slip in performance has set alarm bells ringing at the EPFO, which shot off a missive in early September to the bank to ‘take immediate steps’ to fix the slide.

... contd.