EPFO raps ICICI Pru, SBI on poor returns

Unhappy with the performance of ICICI Pru AMC and State Bank of India — two of its four fund managers — during the first half of the current financial year, the Employee Provident Fund Organisation (EPFO) has asked them to submit an action plan for improving returns.

The Central Provident Fund Commissioner (CPFC), in a letter to both these fund managers, has conveyed its concerns on the poor performance, expressed by the Finance and Investment Committee (FIC), the highest advisory body of EPFO, according to labour ministry sources.

While evaluating the performance of all the four fund managers, FIC has observed that “SBI was laggard, closely followed by ICICI Pru AMC during the first half of the fiscal.” It further said, “During August and September, ICICI Pru AMC had the lowest performance, closely followed by SBI.” Besides these two, the two other fund managers are Reliance Capital AMC and HSBC AMC.

Although SBI has submitted its reply, according to the sources, the organisation is not satisfied with the response.

ICICI Pru AMC, however, has yet to respond to the letter. When contacted, ICICI Pru could not confirm having received a letter from EPFO, asking it to improve performance.

During the October meeting, FIC Chairman, Joint Secretary and Financial Adviser to the Labour and Employment Ministry Rakesh Jain said that a strong letter should be sent to ICICI Pru AMC and SBI asking them to submit their action plan for the next three months to improve their performance. Jain had also said, “If no improvement is seen in their performance by December-end, drastic steps may be considered.”

The performance of the four fund managers appointed by EPFO in July last year is being monitored by rating agency Crisil.

The fund managers started managing EPFO funds in September last year. The organisation has given a part of incremental deposits to four fund managers. The incremental deposits of EPFO are about Rs 25,000 crore every year. It manages a huge corpus of Rs 2.57 lakh crore with a subscriber base of about 45 million.