The country's largest lender State Bank of India (SBI) will cease to be a fund manager of retirement fund body EPFO by March-end, as a bank cannot function as an asset management company under the RBI norms.
"We have been told that SBI cannot work (as fund manager of the EPFO). We have not engaged (its arm) SBI Mutual Fund (as fund manager) because it was not there (as an applicant at the time of bidding) earlier," Labour Minister Santosh Gangwar said.
He was addressing reporters after a meeting of the Employees' Provident Fund Organisation's (EPFO) apex decision-making body Central Board of Trustees (CBT), chaired by him here.
The minister also said: "We have given them (all five fund managers) time till March. We will discuss and take a call as to whom we can engage as a fund manager. We had engaged SBI. But its job is banking and not this job (fund managing). SBI Mutual (Fund) was not enrolled with us as a fund manager. After March, if they (SBI's fund managing arm) come for this then we can engage them."
Currently, SBI, ICICI Securities Primary Dealership, Reliance Capital, HSBC AMC and UTI AMC are fund managers of the EPFO.
The EPFO has separately engaged SBI Capital and UTI Mutual Funds as exchange-traded fund (ETF) managers. The SBI Capital manages 75 per cent of ETF investment of the EPFO, while the UTI Mutual Funds takes care of the remaining 25 per cent.
During the meeting, another proposal to increase the proportion of UTI Mutual Funds as ETF manufacturer came up for discussion which was referred to the EPFO's finance, audit and investment committee (FAIC). The body has invested about Rs 550 billion in ETFs so far, a senior official said.
On the issue of giving higher pension to employees contributing more towards Employees Pension Scheme-95 (EPS-95), the minister said: "This matter is sub-judice with the Supreme Court. After the decision of the apex court, we will take a decision. We have sought an advice of an actuary on this issue. We will take a decision factoring in that advice. There were a large number of people who came here today on this issue. But the decision would be taken by the Government of India."
Asked about doubling the minimum monthly pension to Rs 2,000, he said: "There was no such proposal listed on the agenda for meeting today. The government has to make arrangement (provide funds) for managing existing minimum monthly pension of Rs 1,000. This is subject to government approval.
"We told (the Finance Ministry) what would be the financial implication for keeping minimum monthly pension at Rs 1,000, Rs 2,000 and Rs 3,000 levels. This will be decided by them (the Finance Ministry)."
The CBT meeting Tuesday held by newly-reconstituted Board, approved the constitution of the FAIC, Pension & EDLI (insurance scheme) Implementation Committee and Exempted Establishments Committee (for PF trusts).
The Board also mandated FAIC to select new fund manager for managing the corpus of the EPFO.
It extended the tenure of the current portfolio managers up to March 31, 2019 or till appointment of new portfolio managers, whichever is earlier. The Board also extended the tenure of CRISIL Ltd as consultant up to March 31 2019 or till appointment of new portfolio managers, whichever is earlier.