From correspondents in Delhi, India, 08:31 PM IST

The Employees Provident Fund Organisation (EPFO) Tuesday selected three private fund managers, along with India's largest commercial bank, to manage its corpus of Rs.240,000 crore (Rs.2,400 billion or $60 billion).

'Around Rs.30,000 crore (Rs.300 billion) will be available as incremental accretion to these fund managers each year,' labour and employment secretary Sudha Pillai told reporters after the decision to engage private fund mangers for EFPO money.

Exuding confidence that the decision would have a positive impact on funds management, Pillai, also a member of the EPFO's Central Board of Trustees (CBT), said: 'Now funds will be better and professionally managed.'

The organisation's trustees selected the asset management companies of HSBC, ICICI Prudential and Reliance Capital, along with that of the State Bank of India (SBI), to manage the fund that has 44 million members.

The finance and investment committee (FIC) of the organisation's trustees earlier recommended the three private players as fund managers after they were found to be the lowest bidders, officials said.

EFPO invited bids in April from private fund managers to take care of its assets, a task so far singularly done by the state-owned SBI.

An official press communique from the ministry of labour and employment said the decision to appoint multiple fund managers to manage EPFO money was taken at a special meeting of CBT held here Tuesday.

For over two years, the CBT had been examining the issue of multiple fund managers. In an earlier meeting, the board had decided to appoint a professional agency to assist the EPFO through the process of appointing multiple fund managers.

The CBT short-listed 17 out of 21 applicants, before finalizing the private fund managers Tuesday. Among those rejected were the asset management companies of HDFC and Birla Sun Life.

'Two fund managers among the short listed - HDFC AMC, and Birla Sun Life AMC - made a bid of zero percent. Their bids were rejected after taking a legal advice that zero bid will not constitute a valid contract,' stated the ministry's official communique.

The statement said the proportion of the monies managed by the fund managers would be decided later.

The government also decided 'the fund mangers will also render custodial services for maintaining the previous investment currently held by the SBI'.

HSBC had quoted 0.0063 percent fee, ICICI Prudential quoted 0.0075 percent, SBI 0.01 percent, and Reliance Capital 0.01 percent.

(Staff Writer, © IANS)