Peeved with the State Bank of India for giving poor returns on idle funds, the Employee Provident Fund Organisation (EPFO) has decided to approach the country’s top 10 banks for being its banker. For any bank, it will mean huge business given that EPFO’s incremental deposits are in the order of Rs 25,000 crore every year.

In a recent meeting of the Central Board of Trustees, it was suggested the branch spread of the top 10 banks would be studied before any of them is designated as a banker. The State Bank of India has been EPFO’s chosen bank for 56 years now, and it is also the sole manager for the EPFO corpus.

Employers deposit PF contributions of their staff in local branches of SBI from where it is credited to the EPFO’s investment account. There is normally some delay in crediting the investment account and the EPFO has been demanding better returns on such idle funds lying with the bank.

According to sources, while SBI was willing to offer an interest rate that a normal savings account will earn, the EPFO was not quite enthused. Later, SBI did suggest it could offer overdraft facilities and also an option to invest the idle moneys in liquid mutual funds. But, there was no written proposal to this effect by the bank.

The sources said the board, scheduled to meet on July 5, was likely to discuss this issue further and suggest a course of action to bring in “competition” in the area where SBI currently enjoys monopoly. The collection of funds by the chosen banks from employers could be on the same lines as being done by the I-T department.

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