Even as two private sector players — ICICI Securities Primary Dealership and Reliance Capital Asset Management — were selected in June 2015, to manage Rs 60,000 crore worth of provident fund corpus of the workers of coal industry, they are still awaiting for the corpus to be transferred to them.
While the delay in transfer of the corpus is estimated to lead to an annualised loss of around Rs 5.5 crore to Coal Mines Provident Fund Organisation (CMPFO) on account of higher fee charged by the previous fund manager — SBI, a source close to the development told that the private players are not averse to legal recourse in case of further delay in transfer of corpus to them.
“It has already been close to six weeks since the selection process concluded but the corpus has not been transferred to the winning bidders. The selected players are even considering legal opinion if there is more delay,” said a source close to the development.
An industry insider said that while the annual fund management fee charged by SBI stood at 0.01 basis points (100 basis points is 1 per cent) and would amount to Rs 6 crore for managing Rs 60,000 crore, RCAM and ICICI emerged as the lowest bidders with a bid of 0.0009 basis points to manage the funds. At the new bids, the fee would amount to around Rs 0.54 crore and would thus result into an annual saving of Rs 5.46 crore.
The source informed that the corpus was supposed to be transferred to the two bidders by August 1, 2015 but that has been delayed for some reason. A senior government official, however, told that while in the last meeting the two companies shortlisted for managing the CMPFO money were confirmed, “In the next meeting with SBI Caps, they will be formally entrusted to takeover fund management.”
The process of selection that spanned over a year saw four players — SBI, UTI, RCAM and ICICI clear the technical round and participate in the financial bid. While there are around 4.5 lakh members of the CMPFO, the corpus is set to increase every year with additional flows.