~I"'''-'''''''''..."".-.."._,..aW •••• 'F••.," •..,,,,._,,,'.-,,"' •••• ",·... '-'-~M'l~ ! .j . EMPLOYEES' PROVIDENT FUND ORGANISA TION .~

I NEW DELHII )

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129th Meeting of the

. On

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VENUE: IConference HaU, .'W

3i'd, Floor, EPFO( Head Office), ,Bhavlshya Nidhi Bhawan,14, Bhikaiji Cama Place,

NEWDelHI • 110066. ' .

FINANCE INVESTMENT AND AUDIT.. ' COMMITTEE

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[A SUB- COMMITIEE OF THE CENTRAL BOARD,

EMPLOYEES' PROVIDENT FUND)

19.08.2016 at 12.00 Noon

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EMPLOYEES' PROVIDENT FUND ORGANISATION

AGENDA BOOK129th Meeting of the Finance Investment and Audit Committee,

Central Board, EPF.

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Date: 19.08~2016 INDEX OF ITEMS Tlme:12.00 Noon.

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ItemNo. Agenda Page No.

1. Continnation of the Minutes of 128th· Meeting of the Finance 1·7Investment & Audit Committee (FIAC) held on 22.07.2016.

2. Action taken. report on the recommendation of the 128th . 8-11Meeting of the Finance Investment & Audit Committee (FIAC)held on 22.07.2016.

3. Selection of External Concurrent auditor (ECA) for the audit of 12investments done by Employees' Provident Fund Organisation'sPortfolioManagers.

-4. Model Agreement on Banking Agreement between the Central 13-24

Board, EPF and Nationalized Banks in respect of fundsbelonging to and under control of the Central Board.

5. Peifonnance Evaluation of Portfolio Managers for the period 25-2601.04.2016 to 30.06.2016-

6. Concurrent Audit Reports of Provident Fund(including thefunds) and Pension Fund for the month of May 2016.

Any other item (8) with the permission of the Chair.

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•"29th Meeting Of fIAC 19,Q8,2016

Item No.1: Confirmation of the Minutes of 128th Meeting of theFinance Investment and Audit Committee held on22.07.2016 at EPFO,Headquarter, New Delhi.

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Minutes of 128th Finance Investment and Audit Committee

(FIAC) meeting held on22.07.2016 was drculated vide email and letter

No. Invest.l/1(128th)Mtg./FIAC/2016/7866 dated 25.07.2016. Copyof the minutes Is enclosed as Annexure -'A' of this Item. this officehas not received any observations from the members on the minutes of

the meeting.

Minutes may be taken as confirmed.

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•Telephone: 26178450 Fax No: 26194349

CfiAilltlllfcltll4 QAt :tialoil...Employees' Provident Fund Organisation

. (4IJfw~~,mta~(Ministry of Labour & EmpIovment, Govt. Of Indil)

'1«04114 I HeadOffaIbtYllhy' NIdhi·81W1n. '+"*eHt PIn.,..,. Ntw ptlh1-110011

No. Invest.I/l(12Sth) Mtg./FIAC/2016

To. i

All Members,Finance Investment & AUdit Committee,Central Board of Trustees, Employees' ProvIdent Fund

Sub: Fotwardlng of Minutes of 128th Meeting of the Finance Investment & Audit .Committee (FlAC), CST, EPF held on 22.07.2016 at EPFOHead Office, NewDelhi - Reg.

Sir,

Minutes of 12Sth meeting of the Finance· Investment & Audit Committee(FIAC)held on 22.07.2016 as approved by the Chairperson Is enclosed herewith for

your kind perusal. and necesry action please •. ,,

End:- As above

Yours faithfully,

,//v')(ANKUR P. GUPTA)

Assistant P,F"Commissioner (INVEST.)

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•Cggy mrwacded for Information and necessary aettoD D'eaJe. to:

1. P.5. to Central Provident Fund Commissioner, EPFO,Head Office.2. P.5. to FA& CAO, EPFO, Head Office.3. ACC-I(F&A/IMC)EPFO,Head OffIce.4. ACC-I (Pension) EPfO, Head OffIce.S. Regional provtdent Fund Commissioner-I (Finance & Accounts) EPFO, Head

Office.6. ACC-II (Audit), EPFO, Head Office.

Regional Provident Fund CQmmlssloner-D (COnference), EPFO, Head Office.All Regional Provident Fund Commissioner-II (IMC), EPFO, Head Office.

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(ANKUR P. GUPTA)Assistant P.F. Commissioner (INVEST.)

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•Minutes of the 128thMeeting of the Finance Investment &

Audit Committee (FIAC) held on 22.07.2016 at 04:00 PM

-: 1. The 128th Meeting of Finance Investment & Audit Committee was held on 22.07.2016 fro" 4.00 P.M. onwards in the Conference Hall, 3rd Floor, EPFO, Head Office. New Delhi.

2. The following members/representatives were present in the meeting.1. Sh. Heera Lal Samariya Additional Secretary (LctE), Ministry of

Labour & Employment, Govt, of India.2. Ms. Meenakshi Gupta Joint Secretary & Financial Advisor,

Ministry of Labour at Employment, Govt. ofIndia

3. Sh. Prabhakar Banasure Member, Central Board )Employees'Representative)

The following members could not attend the meeting:1. Sh. Sanjeeva Reddy Member, Central' Board (Employees'

Representative).

2. I Sh. J.P. Chowdhary Member, Central Board (Employers'Representative}

3. She Balasubrahmanyam Member, Central Board (Employers 'Kamarsu Representative).

4. Sh, Suchindra Mislua Joint Secretary, Department of FinancialServices Ministry of Finance, Govt. ofIndia.

In addition to the above, fA &. CAO, EPFO, Convener was also present duringthe meeting.

3. The Chairman welcomed all the members present in themeeting, Thereupon the agendawere taken up.

This FIAC meeting is rescheduled 128m FlAC meeting from 14.07.2016 for wanof quorum. The present rescheduled meeting also quorum not fulfilled because, n 1

representative from employer side, hence the meeting was adjourned to 4:00 PM. On 4:00 Pthe members present was considered as quorum. .

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•. Item No.1: Confirmation of the Minutes of 1l7th MeedDg of the Finance Investment & Audit

Committee (FIAC) held on 04.07.2016.

The minutcs of 1271ll Meeting of the Finance Investment & Audit Committee held on 04.07.2016were confirmed.

Item No.1: AcdoD takeD report ODtlte reeommadatioD of the I11th Meetbag of the Fillaace Investment" Audit Committee (FIAC) held OD 04.07.l0t6.

The action taken report as placed was taken note of by the Committee.

Item No.3: Appointment of External COllcurreat Auditor (ECA) for the audlt of iIIvestments dOD' by' .~EPFO's PortfoUo MaDager - OpeaJal of FiDand.1 bids for the ellpble appUcants.

Following are the minutes of the opcnina of financial bids on July 22. 2016;1. The meeting started with eRIS II.· s presentation on the key findings of the technical bid evaluation of the

applicants who had qualified the pre-qualification bid evaluated on July 04,2016:

.....•.-..----•..............•..•..., ....... "' ..•....•. .,.. _ , '."Q•••• tltatlvf

Criteria (65%

wef&hr)

QllaUtatlve ;Crlterl.(35O/. i FIlla) Score

tweJpt) I

Rau· EUglbI" rorI t'lD.DCIa. Bid '.

Appllcuat

aboveonly one applicant namely MIs H.-ibhakti " Co LLP met the minimum 65% score for getting shortlisted,as per the RFP, for further evaluation offinancial bid.

3. The representatives of the applicant present for the bid openina were thereafter called into the meeting.CPFC updated the applicants on their Technical bid scores and also requested them to seek clarificationsfrom CRISIL, if any. No clarifications were sought by any of the representatives.

4. The members of flAC thereafter decided to open the financial bid of the shortlisted applicant Mis .Haribhakti & Co LLP. lbe financial bid quoted by MIs Haribhakti " Co LLP was announc~ asas.9. 00,000 (RI. Nine Lacs only) per month. flAC decided that since oilly one applicant was eligible forfinancial bid opening, the reasonablenes.Ci of financial bid should be evaluated. FJAC noted that financial .bid quoted by MIs Haribhakti & Co LLP of Rs.9too.OOO/· (Rupees Nine Lakh only) per month since'unreasonable as compared to the fee currently being paid to the current ECA which is Rs.l.OO,OOOI.• per._", ••+1.. 1:1A. t" ~'C!"'''Io!Q,.'\t"A mAttp.r and considered that the owing to the specific requirements of tho EPFO

such as - the firms should have functional offices at Mumbai &. Delhi baving responsible officials; the linn

must be empanelled with comptroller and Auditor General oflndia (CAG) as on the date ofRFP ete., thereare limited number of qualified finns. FfAC, therefore, in view of the eve Circular No. 4/3/07 dated 31d

March, 2007, decided that in this exceptional situation of limited sources of suppJy,tbe authorisedrepresentative(s), as given by MIs Haribhakti &'Co LLP in its proposal, be called for negotiation en thequoted fees to arrive at a reasonable fee. FIAC decided to authorize a three member committee (Sh. SuniJKumar Yadav RPFC·II (lMe), Sh. Amul Raj Singh RPFC-II. (Investment) and Sh. Aja)' Kumar RPFC.;U(IMe» for conducting the negotiation on the quoted fees with the authorized representative(s) of MisHaribhakti& Co LLP to arrive at a reasonable fee and to authorise the Chairman, FIAC to place theoutcome before the Central Board for a suitable decision.

Item No.4: Extension of tenure or Custodlaa of EPFO Secunda Mis Standard Chartered Bank

(SeD) upto 31-03-2017 after their performance evaluatioD for the period 01-67·2015 to 31-03-2016.The agenda item was approved by the Committee and recommended to be placed before the Central Board. .

Item No~S:Selection of Asset MaDagement Companies as ETF maDur.eturer for Investment in ETFs -,by EPFO.

The FIAC deliberated the issue. The allocation for sal and un is 35% and 10% respectivelyfor management Qf debt portfolio. The committee decided that similar ratio of allocation beconsidered for BTF investment. This ratio comes to 78:22 for SBIMF and UTI MF respectively.

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Item No.6~ Update oa1nvestmeDt In Exchol'Traded Fod (July, 2016)

The agenda Wq taken note oCby the Committee with the observation that the same may beplaced before the Board for infonnation.

Item No.7: Report 01 the Expert Sub-Committee oD·lnvtltm.nu ander the Chalrm •• of Sh.AruaKaul Ex eMD, UCO Bank..

.The agenda was taken note of by the Committee with the direction to examine and bring out ac~joopoints for consideration of FIAC. .' .

Item No.8: CBLO borrowlDa transacaloa. by the PorttoUo Mau.en durlnl the period 01.04.2016 .to 30.06.2016. ' '

The proposal as contained in the agenda was taken note oCby the Committee with the observationthat he same may be placed before the Boord for infonnation.

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,.Item No.9: External Coneurrent Auditor Reports perta1llJng to Portfolio Managers.

The matter was placed before the FlAC. It was decided that on observations (i) and (ii). the ECA mayhe called before the FIAC in the next meeting. On observation (Hi)t it was decided to refer instances ofratings downgrade to CRlSJL for further opinion.

Item No.10: Performance EvalultioD of PortfoDo Malgen for th~ period 01.01.1016 to 31.03.2016. '.:

The proposal as contained in the agenda was taken note of by the Committee.

Tabled item: Report of Expert Group on Alternate Strategies ror Investment In Exchange TradedFuods:

The report was placed. The committee suggested that the same may be made pan of the status report .un ETF to be placed before Central Board in the next meeting on 26.07~2016.

The meeting ended with II )1ot. o/thanks loth. CluJlr.

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129'11Meeting ofFIAC- 19.08.2016

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. Applicant

Item No 2: Action Taken Statement on the minutes of 128tbmeeting of the Finance Investmentand Audit Committee (FlAC) held on 22.07.2016

Decfsionl Directions of FIAC Action Taken

1. Appointment of External Concurrent Auditor (ECA) forthe audit of investments done by EPFO's PortfolioManager - Opening of Financial bids for the' eligibleapplicants.

Following are the minutes of the opening of financial bids on

July 22,2016;

1. The meeting started with CRISIL's pre$elltation on the key. .

findings of the technical bid evaluation of the applicants

who had qualified the pre-qualification bid evaluated on

July 04,2016:

Quantit Quanta,dve tive

Criteria Criteri(65% a (350/.

weight) weight)

EligibleforFinal

Score

Chowdhary& 0.3121 0.2713 0.5833Co

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2. On the basis of technical bid scores in the above table,

CRISIL highlighted that the Technical bid score for only

one applicant namely MIs Haribhakti & Co LLP met the

minimum 65% score for getting shortlisted, as per the RFP,

for further evaluation of financial bid.

The matter wasplaced before theCentral Board in its214* meeting held on26.07.2016 andCentral Boarddecided to cancel theprocess of selection ofExtcmal ConcurrentAuditor(ECA ) for theaudit of investmentsdone by Employees'Provident FundOrganisation'sPonfolio Managersand to go forretendering afresh.The . Board alsoauthorized FIAC toconstitute acommittee of officersto finalize the tenderprocess and report ofthis Committee befirst considered byFIAC and then placedbefore the Boardalong .withrecommendations oftheFIAC.

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3. The representatives of the applicant present for the bidopening were thereafter called into the meeting. CPFCupdated the applicants on their Technical bid scores andalso requested them to seek clarifications from CRISIL, ifany. No clarifications were sought by any of therepresentatives.

4. The members ofFIAC thereafter decided to open thefinancial bid of the shortlisted applicant MIs Haribhakti &.

Co LLP. The financial bid quoted by MIs Haribhakti& Co LLP was announced as Rs.9, 00,000 (Rs. NineLacs only) per month. FIAC decided that since only oneapplicant was eligible for financlal bid opening, thereasonableness of financial bid should be evaluated. FIACnoted that financial bid quoted by Mis Haribhakti &. CoLLP ofRs.9,OO,OOO/.(Rupees Nine Lakh Only) per monthsince unreasonable as compared to the fee currently beingpaid to the current ECA which is Rs.l ,00,0001·per month.FIAC discussed the matter ,and considered that the owingto the specific requirements of the EPFO such as - thefirms should have functional offices at Mumbai & Delhihaving responsible officials; the firm must be empaneUedwith comptroller and Auditor General of India (CAO) ason the date of RFP etc., there are limited number ofqualified firms. FIAC, therefore, in view of the CVCCircular No. 4/3/07 dated 3MMarch, 2007, deCidedthat inthis exceptional situation of limited sources of supply, theauthorised representative(s), as given by MIs Haribhakti &.

Co LLP in. its proposal, be called for negotiation on thequoted fees to arrive at a reasonable fee. FIAC decided toauthorize a three member committee (Sh.' Sunil KumarYadav RPFC·II (IMC), Sh. Amul Raj Singh RPFC-II(Investment) and Sh. Ajay Kumar RPFC-U (IMC» forconducting the negotiation on the quoted fees with theauthorized representative(s) of Mis Haribhakti &. Co LLP

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to arrive at a reasonable fee and to authorise the Chairman,FIAC to place the outcome before the Central Board for asuitable decision.

(Item No.3 of 128'b. FIAC)

Extension of tenure of Custodian of EPFO Securities Mis The agenda item will beStandard Chartered Bank (SCB) upto 31-03-2017 .fter placed in the next CBTtheir performance evaluadon for the period 01-07-2015 to meeting.31-03·2016.

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The agenda item was approved by the Committee andrecommended to be placed before the Central Board.

(Item No.4 of 128th'FlAC)

Selection of Asset Management Companies as ETFmanufacturer for Investment In ETFsby EPFO.The FIAC deliberated the issue. The allocation for SBI andUTI IS 35% and 10% respectively for management of debtportfolio. The Committee decided that .similar ratio ofallocation be considered for ETF investment. This ratio comesto 78:22 for SBI MF and UTI AF respectively.

(Item No.5 of 128tla• FlAC)

Update on investment In Exchange Traded Fund (July,2016)

The agenda was taken note of by the Committee with theobservation that the same may be placed before the Board forinformation.

(Item No.6 of 128tll' FIAC)

Report of the Expert Sub-Committee on Investmentsunder the Chairman of Sh.Arun Kaul Ex CMD, UCOBank.

The agenda was taken note of by the Committee with thedirection to examine and bring out action points forconsideration of FIAC.

(Item No.7 of 128th'FlAC)

The matter placed beforethe 2I4th CBT meetingheld on 26.07.2016. Theproposal $S. contained inthe agenda was approvedby the Board.

The item was taken not ofby the FIAC and the samewas placed in the 214thCST held on 26.07.2016.

The item was taken noteof by the FIAC and inpursuance to the directionofFIAC, the action pointsof the report of KaulCommittee is beingexamined.

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CBLO borrowing transactions by the Portfolio Managersduring the period 01.04.2016 to 30.0~.2016.

The proposal as contained in the agenda was taken note of bythe Committee with the observation that the same may beplaced before the Board for information.

(Item No.8 of 128da• F1AC)

External Concurrent Auditor Reports pertaining toPortfolio Managers

The matter was placed before the FIAC. It was decided that onobservations (i) and (ii), the ECA may be called before theFIAC in the next meeting. On observation (Hi), it was decidedto refer instances of ratings downgrade to CRISIL for furtheropinion.

(Item No.9 of 128tla'FIAC)

Performanee Evaluation of Portfolio, Managers for theperiod 01.01.2016 to 31.03.2016.

The proposal as contained in the agenda was taken note of bythe Committee, ' '

(Item No. 10 of 128d1• F1AC)

Tabled item: Report of Expert Gro,up on AlternateStrategies for Investment in Exchange Traded Funds:

The report was placed. The committee suggested that the samemay be made part of the status report on ETF to be placedbefore Central Board in thenext meeting on'26.07.2016.

The item was taken noteof by the FIAC and thesame shall be placed innextCBT.

In pursuance to thedirection of FIAC, an e-mail was sent to ECAwith a request to attendthe ensuing 129th FIACscheduled on 19.08.2016& with regard to pointNo.{iii) e-mail sent toCRISIL for furtheropinion.

The item was taken not ofby the FIAC and the sameshall be placed in nextCBT.

As per direction ofFIACthe report of ExpertGroup was placed in 214thCBT as a part of update ofinvestment in ETF.

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•Item No.3.: Selection of External Concurrent Auditor (ECA) for the audit of investments done by

Employees' Provident Funds Organization's PortColioManagers

1. As per the decision taken in 1961h meeting of the Central Board, EPFheid on 20.07.2011, MIsChandabhoy & Jassoobhoy, Chartered Accountants, Mumbai were appointed as ExternalConcurrent Auditor (ECA) for Portfolio Managers of EPFO for tenure of three years. The tenureof dle ECA, MIs Chandabhoy & Jassoobhoy commenced from 01.11.2011.

2. The Central Board in its2041h meeting held on 26.08.2014 decided that:-(a) The task. of selection of External Concurrent Auditor CECA) with the ·assi~tance of

consultant may be carried out by FIAC.In the same meeting following was decided>

(b) Approved the appointment of MIs CRlSIL Ltd.. as Consultant for selection ofConCUJTentAuditor (ECA). .

3. The tenure of appointment of MIs Chandabboy & Jassoobhoyas External Concurrent Auditor wasextended till October, 2016 as per the decision of the Central Board in its 205th meeting held on19-12·2014.

4. The Request for Proposal (RFP) prepared by MIs CRlSlL and approved with certain changes byFIAC in its 125th meeting held on 24.05.2016 was issued on 6th June 2016.

5. Bids were received from 3 (three) applicants and the processes of opening and evaluations of Pre-Qualification bids, Technical bids for eligible applicants and Financial bids for the eligibleapplicant were carried out on prescribed dates.

6. Based on FIAC decision, the matter was placed before the Central Board. Central Board in its 214thmeeting held on 26th July 2016, CBT decided to cancel the process of selection of ExternalConcurrent Auditor (ECA) for the audit of investments done by Employees', Provident FundsOrganization's Portfoli~ Managers and to go for retendcring afresh, The ~ also authorizedFIAC to constitute a committee of officers to finalize the tender process and report of thisCommittee be fint considered by FIAC and then placed before the Board along withrecommendations of the FIAC.

7. In view of the' above the RFP prepared by CRlSIL is placed for consideration and approval withamendments if any considered by FlAC.

Proposal: In view or tbe Central Board's above decision in its 114th meeting beld on 26thJuly 2016, FIAC may approve the RFP and constitute the committee of officers to ftnallze thetender process.

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RE;QU ST FOR PROPOSAL (RFP)for

Appointment· s External Concurrent Auditor (ECA)For th audit of investments done by

Employees' Povident Fund Organization's PortfolioManagers

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Date of Isiue:06 Junl, 2016

Deadline for submission of Proposal:04 July, 2016 by 3:00 PM

Consultant, to the EPFO:CRiSIL Limited

Pr posal should be superscribed as"Confldentla~ • Propo al for Appointment of External Concurrent Auditor"

To be subml ed In a sealed envelope and addressed to:

Sh. M. Maray.nappa,nel Central PF Comml.,loner.' (lMC and F&A).

Em loyees' Provident Fund Organlution (EPFO).BhaviShya Nidhi B~avan,14. Bhlkaljl Cama Place.New Delhi· 110066

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Table of Contents1. Disclalm.·r ••••••••..•••.•••.•••••••••••,•••••••••••••••,••••••••••••••••••••••••••••••.•••••••..••,.............•.....,............•............ 3

2. tntroductlon •••••••••••••••••••••••••••••••••••••••••••••,•..•••••••••••••.•••••.•••••.••••••••••••'.1•••••'., •••••••••••••••••••••••••••••••••..5

3. Termsof R.f.renc •. ~ ~ e •••• ' ••••••••••••• ,." •• , ••••••••••••••••• " ••• ~•••••••••••••••••••••••••••••••• ,.,.7

4. Dutle. & Re.pon.lbllltles of the Extemal Concurrent AudItor (ECA)••••..•.•...••••••.•••••...•..........•..•9

5. RFP Proc••••••••••••••••••••••••••••••••••.•••.•••.•••••••••••......••.•,..•..••••.....•..•..•..••••,•.•.....••.•••.•_.•••••_•••..•..", .•" ....• 12

a. Bid Evaluation Crlt.rI •..••......••.•••••.••,•••.•......... ,.........• " ~ 15

7. Format of Pre·Qualiflcatlon. Technical and FinancIal bid •.•.•••••••••.........••.•..•••..•••••.•.•.••....•...•.•.•20

8. Format. for Covering Letter and Clarlflcatlons. DevIations and Undertaklng •.•.•••..•......•••.....••26

9. Term. and Condition. for RemuneratIon & Tenure ••••••••••••••••••••••••..••••••••••••••••••••••••.•••..•••...•••...32

10. Investment Guideline. for Investments by Fund Managers ......•••..••..•....•..•.....••....•...••....••..•••..33

11. Glo.aary ••...................•••......•.......•••.......•....•••.•.......•..••..,•....•...................................,...........•" 40

..------------ ----, --,-----Request (or Proposal for Appo;ntment of E'CA for audit of investments done by E'PFO's PortfOlio Mllnagers Page 2 ot «

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1. Disclaimer1. 1. This document /s being published in connection with the proposed appointment of Extemal Concurrent AuditOf by

the EPFO .

. r. t.2. This document does not constitute nOf should It' be interpreted as an o"ef or invitation for the appointment of

Ext.mal Concurrent Auditor described herein.

1.3. This document is meant to provide information only and upon the express understanding that recipients will use it

only for the purpose of fumishing a Proposal fOf being appointed as an Extemal Concurrent Auditor for the audit of

the investments done by EPFO's portfolio managers. It does not purport to be all inclusive or contain all the

informetlon regarding the appointment of Extemal Concurrent Auditor Of be the basis of any contract. No

representation or werranty. expressed or implied. will be made as to the reliability, accuracy or the completeness of

any of the Informat/on contained herein.

1.4. While this document has been prepared in good faith. neither the EPFO. hor any of its omcers make any

representation or warranty or shall have any rasponsibility or liability whatsoever In respect of any statements or

omissions here from. Any liability is accordingly and expressly disclaimed by the EPFO and any of its officers, even

if any loss or damage Is caused by any act or omission on the part of the EPFO or aiw of its officers. or employee or

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consultant. whether negligent or othelWise.

1.5. By acceptance 01 this document, the recipient agrees that any information herewith will be superseded by any

subsequent written information on the same subject made available to the recipient by or on behalf of the EPFO.

The EPFO Of any of its respective officers undertake no obligation. among others. to provide the recipient with

access to any additional information or to update this document or to correct any inaccuracies therem wh,ch may

become apparent.

. 1.6. EPFO reserves the right. at any time and without advance notice. to change the procedure for the selection 01

Extemal Concurrent Auditor or any part of the interest or terminate negotiations or the due diligence process prior to

the signing of any binding agreement.

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1.1. The EPFO reserves the right to reject any or all proposals or cancellWithdraw the Request for Proposal (RFP)

without assigning any reason whatsoever and in such case no intending Applicant shall have any claim arising out

of such action. At any time prior to the deadline for submissiOn of proposals. the EPFO may mOdify. for any reason

deemed necessary, the RFP by amendment notified on EFFO's website and such amllndment shall be binding on

intending Applicants.

1.B. The recipients of the RFP should carry out an independent assessment· and analysis o( the requirements for

appoint'!'ent as Extemal Concurrent Auditor and of the information. facts and observations contained hllrein.

1 q Thi!( rlnclJment has not been filed. reaistered or af)f)rovsd in any jurisdictIOn. Recipients of this document should

Inform themselves of any applicable legal requirements and conform to the same.

.---------- -----_._-------_ ..- .._ .._,---_ .. _... , _•...-. '-"'---Request for Proposarfor Appointment of ECA for audit of investments do"e by EPFO's PortfolIO Managers Page 3 01 41

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1.10, This document constitutes no form of commitment on the part 01 the EPFO. Furthermore, this document confers

neither the right nor an expectation on any party to participate in the proposed External Concurrent Auditor's

apPointment process,

1.11. This document confers neither a right nor an expectation on any party to offer lor apPOintment as External

Concurrent Auditor.

1.12. The EPFO reserves the right to. not consider for the purpose 01 qualification. a proposal which is found to be

incomplete In .content and/or attachments and/or authentication etc. or which is received after the specified date and

time. or not delivered as per the specified procedure.

1.13. When any proposal is submitted pursuant to this RFP. it shall be presumeci by the EPFO that the Applicant has fully

ascerlalned and ensured about Its eligibility to act as Extemal Concurrent Auditor. in the event of it being selected

ultimately to act as Extemal Concurrent Auditor, under the respective goveming laws and regulatory regimen. end

that there is no statutory or regulatory prohibition or impediment to acting as Extemal Concurrent Auditor for the

audit of the investments done by EPFO's Portfolio Managers and it has the necessary approvals and permission to

act as External Concurrent Auditor and further suffers no disability in law or otherwise to act as such.

1.14. Without prejudice to any other rights or remedies available to the EPFO. Extemal Concurrent Auditor may· be

disqualified and their proposals rejected for any reason whatsoever including those listed below:

1.14.1. Material misrepresentation by the Applicant In the Proposal.

1. 14.2. Failure by the Applicant to provide the Information required to be provided in the proposal pursuant to

relevant sections of this document.

1. 14.3. If Information becomes known. after the Applicant has been appOinted. which would have entitled the EPFO

to reject or dlsquaUfy the relevant Extemal Concurrent Auditor. the EPFO reserves the right to reject the

applicant at the time. or at any time after. such Information becomes known to the EPFO and nocompensation. whatsoevar. shall be payable .to the ECA so rejected.

1. 14.4. Any cxmviction by a Court 01Law or indictment/adverse order by a regulatory authority that casts a doubt on

the abONyof the appliesnt to conduct audit.

i.15. All proposals end eccompanylng documents received within the stipulated time will become the property of the

EPFO and will not be returned. The hardcopy version will be considered as the official proposal.

1.16. ~aference to any laws/regulations/guidelines in this RFP document is applicabla to laws/regulatiOns/gUidelines Ir

India.

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2. Introduction2.1 The Employees' Provident Fund Organization (EPFO). India is an autonomous body under the aegis of the Ministry

of Labour and Employment (MoL&E). Govemment of India. The main objective of the organization is to provide old-age socia' security to the subscribers.

2.2 The Constitution of'Indla under "Directive Principles of State Policy· provides that the State shall. within the limits ofIts economic capacity and deva/opment, make effective provision for securing the fight to work. to education and topublic assistance In cases of unemployment, old age, sickness and disablement, and in other cases of undeservedwant. The EPFO Is one of the largest provident fund institutlon.s in the world in terms of members and volume offinancial transactions that it has been carrying on.

2.3 The Employees' Provident Funds & Miscellaneous Provisions Act, ,1952 was enacted by Parliament and came intoforce with effect from 14th March, 1952. A series of legislative inteIVentlons were made in this direction. includingthe Employees' Provident Funds & Miscellaneous Provisions Act, 1952. Prasently. the following thrae schemes arein operation under the Act:

2.3.1 Employees' Provident Fund Scheme, 1952 (E;PF)

2.3.2 Employees' Deposit Linked Insurance Scheme, 1976 (EDLI)

2.3.3 Employees' Pension Scheme, 1995 (EPS) (replacing the Employees' Family Pension Scheme, 1971)

ReQuest for Proposal for Appointment 0; ECA for audit of investments done by EPFO's Portfolio Mansgers Psge 5 of 41

The organization structure of the EPFO Is as follows:

Central Board of Trustees (CBT)(ChlirnMft- Hcin'bIeUnion Minister for LIbout & EmplovmentJ

1

1Executive Committee, CST, EPF

(Chakrntlft. fromamonpt the """"bell of the caT)!

1C~ntral Provident FUndCommissioner

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rFul'lCtiOnll HtJds It"tJC.QUMttfSl

me·' IIMel I RPFC. IlclA) : ~PFC -!

AedltlOn.' cpce;,~t.cs01 ZOIl,' O~tes '

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The organization functions under the ovaraH superintendence of the Centra' Boattl of Trustees (CBT), a tripartite body.I headad by the Honorable Union Minister for Labour and Employment as Chairman.

I1IIIII I'taquea for Proposat fOrAppotntmflhf'r;t SCA IDIICIdlFOIii'tveslments dOne 6'1 EpFO's"POrlfollO Managers Page 6 of 41

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Suoordinate S.motdit\jteOfficers and Staff i ,OffIcers 1M Staff

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3. Terms of Reference3.1 Paragraph 52 of tha Employees' Provident .FundScheme, 1952 provides that all monies pel1aining to the corpus

ara to be deposited In the Reserve Bank o( India (RBI) or Sta,e Bank of India or: in such other Scheduled Banks as

may be approved by the Central Govemment and shall be invested subject to such directions as the Central

Govemment may give from time to ,Ime.

3.2 CBT. EPF appoints Portfolio Managers for EPFO corpus who are required to make all investments as per the

investment pattem prescribed by 'he MoL&E, Investment guidelines issued by the EPFO from time to tIme and the

agreement between the Portfolio Manager and the EPFO.

The investment pettem has gradually evolved to provide greater flexibility in Investment options like Investments in

Term Deposit Receipts, .PubliclPrivate Sector Bonds, and asset backed securities apal1 from Central and State

Govemment Securities .. The EPFO appointed four Portfolio Managers to manage its corpus for two separate

tenures (2008-2011 and 2011-2015) each end five portfolio manaQersfor the tenure 2015-2018 with the objective

of enhancing the performance on its portfolio and at the same time, facilitating comparative monitoring of

performance. The EPFO has selected the following five Portfolio Managers to manage the EPFO corpus:

1. HSBC Asset Management Limited

2. ICICI Securities Primary Dealership Limited

3. Reliance Capital Asset Management Limited

4. State Bank o( India

5. UTI Asset Management Company Limited j

'. 3.3 CBT, EPF intends to appoint an ECA for audit 01 investments done by EPFO's pol1folio managers The ECA is

required to ex,mlne. verify and repol1 whether the portfolio managers have followed the investment pattern.

investment guidelines and the terms of agreement entered Into between EPFO and the pOl1folio managers and

such other audit o( investments as may be required by EPFO from time to time.

3.4 As on 31 March, 2015, the EPFO had a corpus of RS.495, 125.22 crores at face value. During the financial year

2014·15 (01 April. 2014 to 31 Merch. 2015). the tota' investments carried out by the Pol1folio Managers wasRs: 103.759.09 crores (Column E -Total of Column B, C and 0 in the table given below.)

(in Rs. crores)

fund . Fund SilO .1"1 on ' Not Fro-;h Accmtlon on f lntorost ROCOIVMj i MatUrity Procoods I TotallnvrnJtmont: 31103(2015 at Face i account of contrtbutton II during 2014·15 : durin') 2014·15 IIMd. durin!) 20f4·15, : Vatuo i during 2014·15 (C): (0) (E:::B+C+D). /\ I (9) . I I .EPF 32t5.'613.15 24,475.G2 30.484.,42 16.378.78 71.338.82c.r.lS 1';7~' '1'1 ~,~~., ~2. .,.,~.B'J ".97" 23 ~'l.:!55.97EOLI 8.209.10 814.53 844.53 323.84 1.182.90St." Provident 1.052.78 28.00 9320 33.00 154.20Fund

Request for ProPOSalfor Appointment 01ECA for audit of inv.stments done by EPFO's Pol1folio Managers Psge I of 4 ,

Fund I Fund Sizo 3"1 on ! Not Froo;h Accretion on I Intorost Rocoivod I Maturity Prococds I Totallnvl'P.ltmont; 31/03/2015:1t F.lca account of contribution I durlnq 2014·15 I during 2014·15 m:..do durin!) 2014·15: Vafua i durln!l2014.15 I (C) I (0) (E=n"C+D), (A) I (B) ,

. S,." Penaloncum Gratuity. fund ,Tot.,

2.157.88 0.00 187,45 39.75 227.20

.95,125.22 34,823.08 44,188.43 24,749.60 103,759.09

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3.5 Total number 01 transactions during 2014·15 (or G·Sec and Non G·Sec securitIes was approximately 9985. Apat1

from this the number of transactiOns In CBLO wss approximately 2999.

3.6 This document ;s a Request for Proposal (RFP) for the appointment of ECA for the audit of investments done by

EPFO's portfolio managers. The Applicants that may wish to psrticipate in the selection process must suotm: the;r

propoaals as per the process defined in the document.

I 3.7 For further Information about the EPFO. one may visit the website www.epfindia.gov.in I www.epfindiB:com

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4. Duties & Responsibilities of the External Concurrent Auditor (ECA)4. 1 The ECA, while conducting audit of the fund of EPFO managed by the portfolio managers. must:

4.1. 1 Ensure that the audit is to be conducted by a team consisting of one leader and at least two staff Qersonnel(who are qualified chartered accounts with at least one year of work eXQerience). The leader of the teamshould be a qualified charlared accountant with at least five years of experience in the (ield of Alldit and atleast three years of experience In the field of Porlfollo Audit, The audit should be earned out under directsupervlalon o( a Parlner of the chartered accountant firm if the leader of the Team is IIot a Partner of theChartered Accountant firm.

4.1.2 Ensure that they are not engaged for audit of the same fJOrtfolio manager(s) of EPFO for any purpose otherthan the terms of reference contained In this RFP.

4.1.3 Ensure, to the best possible extent, thet the team leader appointed to conduct the audit should continue inhis role ti" the completion of the assignment. For any reason, if there is a change in the team leaderappointed to conduct the audit, the same should be intimated to EPFO immediately.

4.2 Scope of work

4.2.1 Reconcile the Funds flow and Bank Accounts of EPFO with the Portfolio Manager(s) on a monthly basis.

4.2.2 ChtlCk the MIS from custodians of securities and repon exceptions, if any. on an immediate basiS.

4.2.3 Check the receipt of data and MIS from Portfolio Managers and report any exceptions to EPFO

4.2.4 Check the daily transactions with the market data and reporl deviations.

4.2.5 Check tha Credit ratings of the Investments on a daily basis and report any downgrades or negative

watch/outlook Immediately.

4.2.6 To examine and verify whether the portfolio managers have followed the investment pattern. investment

guidelines and the terms of agreement entered into between EPFO and the portfoliO managers,

4.2.7 To scrutinize the investment transactions made by the portfolio managers on. day-to-day baSIS to ensure

that the same are as per the pattem a. well as the guidelines issued by the CST. EPF A/so to pomt out

wherever deviations have baen made.

4.2.8 To highlight any potential conn/ct o( Interest issues such 8S investment of CST. EPF funds by Portfolio

managers in TORs of the banks under same management group.

4.2.9 To verify whether the Interest and maturity proceeds are collected promptly and re-/tlvested as per the

provisions made in the Pattem of Investment. Also to pOint out delays, if any, and the ceuses for such

delay.

4.2.10 To verify whether the Incentives, wherever receivable from the institUtions. are collected Qromptly and

invested as per the prescribed pattern/guidelines.

4,2. 11 To bring out cases of undue delay In the receipt of incentives.

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. 4.2. 12 To verify, from the daily transaction details, whether the charges ara levied correctly by the Portfolio

Manager as per the terms and conditions and to report any excess chMges levied by Portfolio

Manager on account of splitting up of investment deals.

4.2. 13 To verify whether the funds were Inves.ted promptly by Portfolio Managars. If the funds remained un-

investad for a significant period, then to assess opportunity costlbenefit due to delayed invastments for un-

invested period.

To verify whether there is a reasonable system of authOrization at proper levels and there are adequate

system of Intemal controls commensurate with quantum and value of investment transactions,

To verify whethar adequate re.cords are kept in support of each investment decision.

To ascertain and report whether the Investments have always been made at the optimal market rate, The

ECA will look into the price on the date of investment and check the proportion of investment closer to

lowest. medium and highest rates,

4.2. 19 To verify whether Investments are made at the highest available yield for the particular period of maturity

4.2.20 To comment on intemal control mechanism, whether the systems are adequate to aVOId any internal

t frauds. " not, suggest a suitable mechanism after discussing the· matter with ·the POltfolio Manager

I concemed.

r. 4.2.21 To examine whether the Portfolio Manager has taken steps to address issues highltghted during the

performance review of Portfolio Managers or otherwise.

4.2.22 To bring out any other point which comes to notice of ECA during the course of audit.

4.2.14

4.2.15

4.2.16II 4.2.17

I 4.2.18

To verify whether proper records have been maintained in respect of all transactions and contracts and to

ascertain whether the records are updated correctly and on tImely basiS.

To verify whether aI/ shares, securities, debentures and other Investments have been held in the name of

Central Soard of Trustees, Employees' Provident Fund (CST, EPF).

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4.2.23 Special care shall be taken to examine the cases of tax deducted at source and the receipt of refund for

the same or the receipt of TDS certificates In Form 16-As for those cases. The details may be worked out

for the cases in respect of which no refunds or TDS CertifiCates are received.

4,2.24 The auditors have to ensure that all the guidelines/circulars issued by the GovernmentlCBT. IEPF from

time to time are followed and the various points mentioned in the scope of audit mentIoned above are

looked Into.

4.2.25 The Audit Report shall a/so identify shortcom;ng~ in the existing set up. which are to be taken care of by

issuing suitable guidelines .

. 1 4.2.26 The concurrent audit needs to be carried out and Report submItted to the EPFO on a monthly baSIS. the

audit report for a given month ne~ds to be submitted to EPFO by 1Sh day of the subseQuellt month

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4.2.27 In Audit Reports. audit observations regarding Pension Fund. Provident Fund, EOLI Fund, EPF Staff

Provident Fund. EPF Staff Pension and Gratuity Fund. etc., should be categorized separately as separate

accounts are maintained by EPFO. Concurrent Audit report on Pension fund shall be bound separately

and a consolidated report on al/ other funds shall be bound separately for submission to EPFO

4.2.28 Other than those mentioned above. the Extemal Concurrent Auditor may be reqUIred to perform any other

audit related activity as required by EPFO from time to time.

4.2.29 " appointed as ECA for the audit of investments made by EPFO's Portfolio Managers. EPFO may verify the

records of audit through an extemal agency. for which the ECA is reqUIred to provide necessary support.

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5. RFP Process5. 1 Steps In RFP Process

5.1.1

5.1.2

5.1.3

5.1.4

II.

5.1.5Il; 5.1.6

II 5.1.7,. 5.1.B.

Submis$ion of Pre-Qualification. Technical and Financial bids by Applicants.

The Applicants mey respond to the RFP by submitting the required Pre-Qualification, Technical and

Financial bids to the EPFO as detailed in Section 7 o( this document.

The authorized representative o( the Applicants may be present at the time of opening of the Pre-

Qualification, Technical and.Financial bids.

The bids must be submitted in a sealed envelape conSisting of two (2) copies of all the bid documents (i.e..

two capias aach of Pre-Qualification Bid, Tachnical Bid and Financial Bid) including softcopies of Pre-

Qualification Bld·and Technical Bid in two (2) CDs.

The bids must be submitted in a sealed envelope consisting o( three bids t.e. Pre-Qualification Bid.

Technical Bid and Financial Bid.

Pre-Qualification. Technical and Financial bids should be submitted in separate sealed envelopes WIth each

envelape super-scribed in bold as ~Pre-Qualification bid". "Technical bid" and "Financial bid" respectively.

The Applicant's name and address shall be mentioned on the right hand side o( a1lenvelopes.

All the three envelopes should be placed In an envelope. duly sealed and super-scribed as "Confldentlal •

Proposal for AppOintment of External Concurrent Auditor". along with the Applicants name and

address, and the name of the primary and secondary contact person must be provided on the right hand

side of the sealed envelope.

5.1.9 There must be an Index at the beginning o( the proposal detailing the summary of all information contained

In the PropOIaI.

5.1.10 All pages of,the proposal must be serially numbered. The currency of the proposal and payments shall be m

Indian National Rupees only:

5.1. 11 The pfOpoMls may either be hand delivered or sent through registered post or courier.

5.1.12 EPFO will not accept delivery of proposals by 'ex or e-mail. Proposals received in such manner will be

treated as invalid and rejected.

5.1.13 THE APPLICANT MUST ENSURE THAT THE BIOS REACH EPFO IN TIME AND NO DELAY IN POST

OR OTHERWISE WILL BE ACCEPTABLE. RECEIPT OF ANY OELA YEO PROPOSAL' WILL BE

STRAIGHTAWAY REJECTED WITHOUT OPENING THE SAME.

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t5.2.1 A Committee of officers of lPFO constituted for the purpose and consultant appointed by EPFO. will op~"rl

and evaluate the conten of the documents received to ascertain that all documentslinformalt(ilirequirements are provided' the format and the manner specified.

5.2.2 EPFO may, where desired ecessary, seek further clarifications from anyl all applicants in respect of anyInformation provided in the FP.

5.2.3 The Applicant must furnish tiflcatlons within the stipulated time frame famng which the RFP submitted n,'the ApplJcantconcemed be treated as Incomplete.

5.3

All Applicants. who qualify on the re-Qualiflcatlons bid criteria as laid down in Section 6.1 would only be fllrtht-'r

evaluated on technical and financla ds as follows:

5.3.1 Technical bid

The Technical bids of all th Applicants will be evaluated as per the criteria specified in·Secllon6.2 of It'l!''

RFP.

5.3.2 Financial bid

All ApplIcants, who score a least 65% In the Technical Bid would only be short·Ilsted for the evaluation ,Ii

Financial bid.

5.3.3 The final eV&ruatlonwould based on both technical and financial bids as explained in Section 6.3.

5.3.4 The proposals shall be val for a period of Six (6) months from the date of opening of the FinanCial Bid .

5.4 Flnallsatlon of the ECA

5.4.2 .EPFO merves the right to neel the appointment process. can for a re·bid without assigning any reas(,qthereof.

5.5 KeyActivitiesand Datal

The ex.,ected schedule of key actlvi as for the purpose of 'this RFP is outlined below:

s- No. KeyActivitio;.;; DtI'~DJtc' ;.£;£

2. Lastdatefor submIssionof riel via .-maU ot postonRFP

3. Pf'e..bIdConference4. lMt datefor receiptof bid5. OpenIngof Prt-Quallfteallon •8. OpenIngof Teehnlcal bids fo eligibleApplicants

._.J~_".._~':'i.~£lnancial bIdI ..._e ~ib!! ..~ts .._.

06 June. 2016 (Monday)17 June. 2016 (Friday)

21 June. 2016 (Tuesday)• 3:00 PM,04 July. 2016 (Monday)

0<4July. 2016 (Monday)

04 July. 2016 (Monday)

.....1~.July. 201,6 (Thursday)

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\' St.No. I Kev Activities!} . ! Ouo Dato·

8.9.

INuance of letters to selected ECA Affer approval of Central Board of TrusteesSelectedECA to be ready in an respects Within 1~ days of issue of lel(er intimating

"__ .__ ._.". _ .._ ..... _ .appoint,!,ent.---------------------• TheEPFO reserves the right to change any datelfime mentionedin the schedule above.

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6. Bid Evaluation Criteria6.1 ThePre-Qualification criteria' for selection of ECA for the EPFO's Portfolio Managers is as 'ollows:

. I . . . ,I SupportIngS. No i Criteria . . . 0 t

I '. I acumen

1Th. name of the Paltn.rshfp Fifm should b. registered with the ICAI. The Firm must have reglst.red WIthth.,CAI on or before 01 April. 2006.Should have valid Income tax Pefmanent Account Number (PAN) .s 0" date of applicationThere must be a.t least FIVE (5) QualifHKI Chartered Accountants working as fulHime Partners as on thedate of applicationThe firm must have at teast FIFTEEN (15) other accounting staff members in addition to the Partners ason the date of .ppllcatlon.The Flfm mus' have experience", each of the last FIVE (5) Financial V"ars ending 31 March. 2016 inconcurrent audit of at #east one account of Portfolio Manage'· wilfJ annual tu(nove~ of at least Rs. 5. 000Crores.The Fffm Iany partner should not have been convicted by S COLlIf of law or mdictmenll adverse orderpassed against the fifm I any partner tl/l·the date of applicationShould heve functional offices at Mumbai " Oelhl having responSible offic/sls.The firm must be empanelled with Comptroller and Auditor General of India (CAG) as 0/1 the date of RFP

SactlOlI 7 2 9Seelloll 7.2. 10

Section 7.2 1

2

3

Section 722

Section 72,3 &Section 7.2.4

4 Secllon 7 2.5

5 Saction 7.2 e

See/lOll 7.2 8

7

8·'nclude, Investment portfolios managed by mutual funds. life insurance companies. penSIon funds. retlrement/providonl fundS.superannuation funds•Annual turnover as on a given date must be calculated as the sum of buy and sell transaction amounts d"flng lost one YHS' rn«annual turnover must be cs/cu/atedon the following dates; 31 March. 2016; 31 March. 201S. 31 March. 2014: 31 March 2013 RtIIt 31'March. 2012.

>. 6.2 Technical evaluation parameters

The following tables outline the broad parameters based on which evaluation of technical proposals of the applicants shallbe carried out by the EPFO:

6.2. 1 Quantitative criteria

. . .' ,. Supporting IMea'luro l Mea'1urcment Criteria' ,.'1 Weight

Document

TrICk record d continuousNumbe, of yeatS of continuous oPerationS as of 31 March. 2016

SectIOn5%

oPerations 731

Aggregate of AveregeAggregate AAUM across all accounts of PortfOlio Manegers· (Whoseconcurrent audit is done by the fifm) • sum of ~ggregate AAUM as of Sectton

Assets Under Management31 March. 2016: 31 March. 201S: 31 March ~f4: 31 March·2013 ana 732 15%

(MUM)31 March 2012.Expenence olthe lifm In terms of finanCIal years as of 31 March.

Sf;lctlonRelevant experience 2016 in concurrent audit of the accounts of Portfolio Managers· 15"f,.. 7 .1 .1

lIi1vmg rurnover 01 ner less man KS.:J.UCJfJc.;rores.

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. SupportIng IMeasure Measurement Crlterla t Walght

Dacuman

Number of accounting st,ffmembersTotal

• ·'ncl/ldes investment portfolios managed by mlltusl funds. life Insurance compenies. pension funds. retirement/provident funds ..superannuation funds#Annua' tumover as on a given date must be calculated as the sum of buy and sell transaction amounts during last one year. Theannual tumover must be calculated on the following dates; 31 March. 2016: 31 March; 2015: 31 March. 2014; 31 March. 2013: 31

Number of clients

Number of accounts of Portfolio Managers· heVing tumovei' o( atle,st Rs.S.OOO Crores· sum of number of clients 8S 0131 March.2016: 31 March. 2015; 31March 2014; 31 March 2013 and 31 March2012

Number of qual/fl8dChartered Accountsntsworking as fuNtime Partners

Number of qualified Chertered Accountants working as fulltimePartners as of 31 MetCh. 2016

Experience of partners Cumulative experience of partners of firm 31 March. 2016

Number of accounting staff members eXCluding lullt/me Partners. whoare chartered accountants as of 31 March. 2016..

\.

March, 2012 and so on.

6.2.2 . Que/itetlve criteria .

Section 1.5%7.3.4

Section6%7.35

Section6%

7.36Section

3%7.37

65 -Ie

. Sr . '. . . , I Supporting I. Objectlvn Pararneters Measurement criteria . " I d ' Woight

No ' ocumcnts I

PropoS6d technologyplatform & system,MIS formats. BusinessContinuity Plan &Disaster RecoveryPfanand Oat,Security::Jt~;t::.~.~lf~~~~~::~'5~;-~j::;>c..~\~~::-.~~:~'~f'\:~~.~..A~~'.:"

Detsiled of proposed teChnology platform &

system. MIS formats. Business ContinUity Plan &Disaster Recovery Plan and Data Security

1Proposedproject plan

ProfIle 01 theproposedexecutionteam

Qualification andExperience

Qualification and Experience based on CVssubmitted

Total

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Section738

2000%

SectIon739 1500%

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8.2.3 Evaluation and scoring process (Please note that the numbers used in this section are for illustrative

purpose only)

Parametric5% 15% 15% 15-4 6% 6% 3%

WeightsApplicant 1 12 150000 6 50 6 50 20Applicant 2 19 200000 9 30 9 60 24Applicant 3 14 180000 7 60 6 55 16

. I Applicant 4 18 100000 12 40 9 45 20

Applicant 5 24 290000 15 80 12 100 16

Maximum 24 290000 15 80 12 100 24BaSis forparametric Maximum Maximum Maximum Msximum Maximum Maximum Maximum.,evaluation

!abl. 2 (Scoring of parameters)

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WeightsApplicant 1 0.50 0.52 0.40 0.63 0.50 0.50 0.83 034

• Applicant 2 0.70 0.60 0.60 0.38 0.75 080 1.00 040"Applicant 3 0.58 0.62 0.47 0.75 0.50 0.55 0.67 0.39

Applicant 4 0.75 0.34 0.80 0.50 0.75 045 0.83 0.38

Applicant 5 1.00 1.00 1.00 1.00 1.00 1.00 067 064

"Working for Applicant 2 III (5% ·0.79+ 15% ·0.69+ 15%·0.60+ 15%·0.38+ 6% ·0.75+ 6% ·0.60 + 3% .,. 00) III 0 40

Request for Proposal for Appointment of ECA for audit of investments done b" EPFO's Portfolio Manttgers Page 17 of 41

"fable 3'(QuaUtatlve parameters eve/uation)

, , Proposed project plan for oxecutlon of tho, e e , me t ,Proposed execution teaman qn ",0

Plramttrtc W"ghttApplicant 1Applicant 2

Applicant 3Applicant 4Applicant 5

MaximumBasis for parametriC,.!V.'~/U8:!~. .. _

20%3243,53.5••

15'/.4153353.5

••M8ltfmum Maximum

: T~bl. 4 (Qualltatlveparametel3 scoring)

< : Proposed project plan for P - d' : Total Scorobasad on ouautattvoI ropose execution team I " •

, execution of the asslgnmcnt. : ' paramoters

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Parametric Weights 20% 15'. 35'/.Applicant 1 0.75 1.00 030

AppNc,nt 2 0.50 0.38 016"

. Appllc,nt 3 1.00 0.75 0.31

AppNcant4 0.88 0.88 031

. Applicant 5 .__... ,. . 0.88 0,88 0 31Not•• The'"a;"imetric score (or each applicant Is calculated on the basis o( their .scare on each parameter relative to thebest score for that paramater. The best score would be the malt;mum score, as a$Se$SecJ during the evaluation for that

, parameter. E.g. In case of proposed e~ecution team. the maximum score is 4. Applicant 1 would therefore have a score01 1 and th. sccws of all other Applicants would be calculated relative to the best score. Applicant 2. for Instance wouldhave e score 0(0.38 (1.514).

"Worldng (or Applicant 2. (20"·0.50+ 15"·0.38) • 0.16r.

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'1Request for Pro/Josal (or AiJQOintment01EeA for aud" of investments done by EPFO's PortfOlio MRnagers Pr.Jge 18 of 41

6.3 Overall evaluation scoring

evaluationNote· Only Applicants with 'a minimum score of 0.65 in technical evaluation would be considered for the final evaluation.In arriving at the final score. the' scores for each Applicant on the Technical and Financial Bids are calculated separately.The scores for each Applicant are scaled relative to the best score on Technical and Financial Bids. The best scores forthe Technical and Financial Slds are the maximum score and minimum bld.(aa percent of the investments) respectively·c.g. In case 01 Technical Bid. tha maximum score ;s 0.95. Applicant 5 would therefore have a score of 1and the, scoresof all other Applicants would be calculated relative to the best score. Applicant 3, for instance would have a score o( 0 74(0.7010.95). In case of the Financial Bid. the minimum bid Is 50000. Applicant 3 would therefore have a score of 1 and thescores of all other Applicants would be calculated relative to the best score. Appllcsnt 4. for instance would have a scoreof 0.50 (500001100000). The final evaluation of each Applicant would be done on the basis of their weighted average

" score on Technical and Financial Bids. The Technical and Financial Slds would have a weight ~ 80% and 20%respectively.

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ParametricW"ghwApplicant 1Applicant 2Applicant 3Applicant"Applicant 5Maximum IMinimumBasiS fOr final

80%

o.e« Not Ellgfbte0.56 Not Eligible0.70 Eligible 0.740.60 Eligible 0.730.95 Eligible 1.00

0.95

20% 100%

t50000100000

75000

50000

1.00

O.SO0.67

0.79"06~0.93

231

Maximum Minimum

IIWorldng for Applicant 3. (80%"0.74+ 20%*1.00) =0.79

.-------------------------------_._".' .. '---"- _.'" ...•__ ...__ ... ----.-Request for Proposal for Appointment of ECA (or audit 01 investments done by EPFO'."2PoI1folio Managers Page 19 of 41

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7. Format of Pre-Qualification, Technical and Financial bid7. 1 Documents comprising the proposal

7.1.1 The proposal submitted by the Applicant shall comprise the following documents:

7. 1.2 Pre-qulllification bid with all the information, as laid down in Section 7.2. duly filled in along with all

attechments/schedules duly completed and with a covering letter. as per the format defined in Section 8 1.

signed by the authorized representative of the Applicant.

7.1.3 Technical bid with all the technical information, as laid down in Section 7.3. duly filled In along with all

attachments/schedules duly completed and with a covering letter. as per the format defined in Section 8.2.signed by the authorized representative of the Applicant.

7.1.4 The Applicant's Financial bid. as per the format defined In section 7.4, along with a covering letter as per

the format defined in Section 8.3, signed by the authorized representative of the Applicant.

7.1.5 Any deviations from the requirements of the RFP must be included as a separate statement. as per the

format defined in Section 8.5.

7. 1.6 Any other information that Is to b8 submitted during the course of the proposal process.

7.1.7 There must be an index at the beginning of the proposal detailing the summary of all information contained

in the proposal. All pages in the proposal must be serie"y numbered.

. 7.2 Pre-qualiflcs.tion bid format

Name of the Audit Firm (full name of the firm):

Address with telephone No .. Fax No.. E-MaiIID. etc.

7.2. 1 The name of the Partnership Firm should be registered with the ICA/. The Firm must have registered with

the ICAI on or before 01 Apn1, 2006· Enclose copy of Registration

Sr. \ 1 Supportlnq document ,II Rem:Hkglf' I, Annexure., Particulars, ,

No \ submitted , any I No.

1 Date and RegistrationNo. of the firm with ICAINumber of completedyears of practice 8S of 31March. 2016.

2

7.2.2 Valid income tax PAN as on date of application- enclosa copy.

Sr. No. i Supporting Documents submitted I Rcmarkg In Jrty I Annexure No;

72.3 There must ~e at least FIVE (5) Qualified Chartered Accountants wO!*ing 8S fulltime Partners as on date a

applICatIOn· Underrakmg trom the Malll:lg;IIg PflIlllttt UI ttI./UiVdittlllum"",,;vtt/i.;;'ad.': ,~'rmo:crtifi'in;; t.':::same. Refer section 8.6 for the format 01Undertaking

----_._. -.-.-. '-_. ---_. .. . ....,'Request for Proposa' for ApPOIntment 01ECA for audit of investments done by EPFO's PortfoliO Managers Page 20 of oJ

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7.2.4 Number of Partners and detail profile of each partner with membership No. as on date of applicatIon to be

stated.

Sr. No. I Supportlnq Documents submitted I Remarks in any ( Annexure No.

7.2.5 The firm must have at least FIFTEEN (15) other accounting staff members in addition to the Part lie,s as on

date of application. Undertaking from the Managing Partner or equivalent official of the AudIt firm certIfying

the same. Refer section 8.6 for the format of Undert~king

Sr. No. ! Supporting Documents submitted I Remarks tn any ~Annexure No.

7.2.6 The Firm must have experience in each of the last FIVE (5) Financial Years ending 31 March. 2016 in

concurrent audit of at least one account of Portfolio Manager with annual turnover of at least Rs 5.000

Crores • Undertaking from the Managing Partner or equivalent official of the Audit firm celt/fymg the same

Refer section 8.6 for the format of Undertaking

7.2.1 State details of audit conducted in tha area of Portfolio Management for the last 5 years ie from 01 Apfli

2011. List of major clfents with the nature of activity handled to be enclosed.

. Sr. No. I Supporting Document') submitted i Remarks In ;my I Anne}(urG No.

7.2.8 The Firm I any partner should not have been convicted by a court of law or indictment I adverse order

passed against the Firm / any partner till the date of application- An affidavit to this extent snail be fllrnlshed

duJy signed~by the Menaging. P.al':tnerol tbeF;rm. TI1fJ,,,icl'lIit should be notarized by a Notary PubliC

Sr. No. \ Supporting Docurnnnts submitted : ~em<lrkg In any ! Annexure No.

7.2.9 The Firm I any partner should have functional offices at Mumb.i & Delhi haVing responsIble officI"'$ as 0'

date 01 application .• Undertaking from the Managing Partner or equivalent official of the AudIt firm cel1lfym{

the same. Refer section 8.6 for the format of Undertaking

Sr. No. I Supporting Documents submitted I Remarks In :1ny I Annexure No;

7.2.10 The firm must be empanelled with Comptroller and Auditor General of India (CAG) as on the date of RFP

Undertaking from the Managing Partner or equivalent official of the Audit firm cer1ifying the same Ref,

::;1:11..;1;\,)1' 8.G fur the format of Undertaking

Sr. No. I Supporting Documents submitted! Remarks In anv ! Annexure NO'.

---- --- ..._ .•..._-- --.-. .__ •........... '-'-'Request for Proposal for AppOIntment of ECA for am]I' of investments done by EPFO's PortfOlIOMatlnge,s P,lge 21 01

t. 7.3 Technical Proposal Format

The following quantitative information is required to be submitted by the Applicants:

7.3.1 Number of years of continuous operations as of 31 March. 2016· Undertaking from the Managmg Partner

or equivalent official of the Audit firm certifying the sama. Refer section 8.6 for the format of Undertaking.

Number of vears ot conttnuous operations

7.3.2 Aggregate AAUM across all accounts of Portfolio Managers (whose concurrent audit is clone by the firm) •

sum of aggregate MUM as of 31 March, 2016: 31 March. 2015; 31 March 2014; 31 March 2013 and 31

March 2012. Refer illustration given In section 7.5.1.

Sum of Aqgreq~to AAUM (in Rs croros)

7.3.3 Experience of the firm in term of financial years as of 31 March, 2016 in concurrent audit of the accounts of

Portfolio Managers having turnover of not less than Rs.5,OOOCrores - Undertaking from the Managing

Partner or equivalent omc/al of the Audit firm certifying the same. Refer sectIon 8.6 for the format of

Undertaking.

Experience (111yeatS)

7.3.4 Number of accounts of Portfolio Managers having turnover of at least Rs.5,000 Crores • sum of number of

clients as of 31 March, 2016; 31 March. 2015; 31 March 2014; 31 March 2013 and 31 March 2012. Refer

illustration given In section 7.5.2.

Sum of number of clients

I"

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•"

7.3.5 Number of qualified Chartered Accountants working as fulitima Partners as of 31 March. 2016 •

Undertaking from the Managing Partner or equivalant official of the Audit firm certifying the same. Refer

section 8.6 for the format of Undertaking.

7.3.6 Cumulative experience of partners of the firm as of 31 March, 2018 • Undertaking from the ManagIng

Partner or equivalent official.of the Audit firm certifying the same. Refer section 86 for the format of

Underlaking.

------------------------------ --- -~..Request fqr Proposal for Appointment of ECA foreudit of investments done by EPFO's Portfolio Managel's Page 22 of 41

. No. of partners i CUmll!atlv~ oxpcrtcnco of ! Remarks If any- '"I tho partners (In Yl!ars) : "

Pro"Ie of the Partners of the firm

Format for profile of Partn ••.• :

Name of the Partner

Proposed Position and Role

AgeQualification

Expertence In the relevant are.

Other areas of expertence In audit

Current Responalbllltl ••

. No. of years of experience In relevant areasTotal No. of years of expertence '

Tenure spent with the firm

.,~".~ther polnt ..._...._,

7.3.7 Number of acc(xmtlng staff members excluding fulltime Partners. who are chartered accountants as of 31March. 2016· Undertaking from the Managing Partner or equivalent official of the Audit firm certifymg the

seme. Refer section 8.6 for the format of Undertaking.

II

t 7.3.8

I." r.,·~· r·. ,· I t-

o·00 I0

0

0·

DetaRs of proposed Technology Platform & System. MIS Formats, Business ContinUIty Plan & DIsaster.

Recovety Plan and Data Security

Detairs of proposed "~ Annexure No. having. I Rcmal1<s If anyI detail!) I '

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TechnologyPlatform & System (write up 01not more than 500 worr:Js)MIS Format' (slImpie MIS format, and writ. up 01 not more than 500words,Busineu Contlnu;ty Plan & Disaster Recovery Plan (write up of notmore than 500 words)Data Security (writ. up of not more than 500 words)Consolidated presentation covering aN the above mentioned in nOimore than 20 slides

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7.3;9 Average experience of the proposed execution team In portfolio audit as on 31 March. 2016

Net. of team members i Avcrago cxportence (Ill years) of tho proposed execution team In i Rem3rks If any: portfolio audit ' .

No. of team members t Averaqe tenure (In years) of proposed execution team Irt tho Remarka It nny, current firm '

'.\ .

Pronte of the proposed execution teem

Format for profile ,proposed execution team member:

Name of the team memberProposed Position and RoleAgeQuallftcatlonCurrent ResponsibilitiesNo. of yea•.• of experience InPortfolio auditTotal No. of years of experienceTenure spent with the firm

,~~y_<:,~~,~I.n~ .._ • _•._._.

7.3. 10 Organization chart - with names and .responsibility(ies)

7.3.11 Write up on any other information that the Applicant thinks would be worth mentiOl'llng In the proposal (notmore than 500 words).

,7.4 Financial bid Format7.~.1 The Fintlnciel bid $hall be submitted In the following format

charqos " In flqurcs (R9.) i In words

Concurrent Audit Fee per month

Request for Propo&B/ for Appointment of eCA for audit of inve.stments done by EPFO's Port/olro MaIUJ(18rS Page 24 of 41

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7.5 illustrations for calculations

7.5.1 illustration forcalculalion of Aggregate AAUM

St~p 1: Calculation of aggregate AAUM for a year ended date (assuming that the audit firm IS dOing audit of.

Porlfollo Manager 1and Portfolio Manager 2)

,. Apr.1S

2· Apr·153-Apr·15

100000102000103000

1SOOOO

250000150000

3O-Mar·1631·Mar·16AAUM

Aggreg.te AAUM •• of 31 March,2018._ .•._--_ .._...;;......--

104000108000

-AVERAGE of all the above (A)

120000100000

=AVERAGE of all the above (e)

-A+e-------- _._ .._--_ .... _ .

A similar calculation to be done for the dates - 31 March, 2015; 31 March, 2014: 31 March. 2013 and 31

March. 2012

Step 2: Sum the Aggregate AAUM as shown below

~·:.:.::_.~~umQf!"99~.1.":9?!_I)_~,~u.r~(R~ cro~~!!)'..:."Year ended dat<i -. \ Aggrcg~tc1 AAUM31 Merch.201631 March. 201531 March. 201431 March. 201331 March, 2012

100000102000123000120000

110000

Sum of Aggregate AAUM -SUM of aU the above

7. 5. 2 Illustration for calculation of number of clients

Year ended date ' Number of accounts of Portfolio Managers having turnover of at roast RiJ.5.000 CrOt"&1'J

3.1March, 201631 March, 201531 March, 201431 March, 201331 March. 2012

Sum of number of clients

1012

10129

-SUM of all the above

--------------------------_. __ ._-_ ..•. - ...•-.Request for Pl'OIJOSSlforAppointment 01 ECA for audit 01 Investments done by EPFO's Portfolio Managers Page 25 of 41

.~ Sir,

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. 8. Formats for Covering Letter and Clarifications, Deviations andUndertaking

8.1 Fonnatfor PnJoqueliflcetlon Covering letter

(To be submitted on the official letterhead of the interested party submitting the RFP)

Ref: --------------------OetelPlece : _

$h. M. NerayanapRS.Additional Central PF Commissioner-I (IMC and F&A).

. Employees' Provident Fund Organization (EPFO).Shavishya Nidhl Shavan.14, Bhikaljl Cama Place,New Delhi - 110066

R.f: Pre-quaUflcatlon for appointment a. External Concurrent Auditor fot:'the EPFO's Portfolio Managers

We refer to the communication Inviting Request for Proposal (RFP) for Appointment as External Concurrent Auditor forthe EPFO's Portfolio Managers. We have read and understood the contents of the document and wish to partiCipate Ihthe appointment process. We are pleased to submit our Pre-qualificat!onbid along with all the necessary documents. asmentioned in the RFP. for appointment as External Concurrent Auditor for the· EPFO's Portfolio Managers. We confirmthet we satlafy the Pre-qualification criteria set out In the relevant sections of the RFP.

We agree to unconditional acceptence of all the terms and conditions set out in the RFP documents.We coryffrm thtft the informa·tlon contained in this proposal or any part thereof. including lis e>thibits, scllec1l1les.ena otne«documents dtllivered to the EPFO Is tNe, accurate, and complete. This proposal includes all mformatloll necessary toensure that the statements therein do not. in whole or in part, mislead the EPFO as to any matenat fact

We have agreed that (insert individual authorlsed representative's name) will act as our repres81JIatIVeon our behalf anahas been duly authorized to submit the proposal.

Further. the authorized signatory ;s vested with ~uis;te powers to furnish such tetter and authentICate the same

Yours faithfully.

For and on behalf of {lnsert company name)

Authorlsed Signatory

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8.2 Technical Proposal Covering Letter

(To be forwarded on the letterhead of the Applicant submitting the proposal).

Ref:----------------Oate: _

Sh. M. Nareyanappl,, Additional Central PF Commissioner-I (lMC and F&A),

Employaes' Provident Fund Organization (EPFO),Bhavishya Nidhl Bhavan,14, Bhikaiji Cama Place,New Deihl - 110060

Sir.

Ref: Request for Proposal (RFP): Appointment of External Concurrent Auditor (ECA) for the EPFO's Portfoliomanagers

We refer to the Request for Proposal (RFP) for Appointment of Extemal Concurrent Auditor for the EPFO's Portfoliomanagers .

.We have read and understood the contents of the RFP document end pursuant to this. we hereby conftrm tllat we arelegally empowered to act as ECA and satisfy the requirements laid out in the RFP document.

Having examined the RFP document. the receipt of which is hereby duly acknowledged. we. the underSigned, offer toprovide the services as required and outlined in the RFP for Appointment of ExtemalConcurrent Auditor (ECA) for theEPFO's Portfolio managers.

To meel such requirements and provide such services as set out in the RFPdocuments. we attach hereto our response tothe Rl=P document. which constitutes our proposa' for being considered for selection as ECA

We undertake; if our proposal is accepted. to adhere to the stipu/ilions put forward in the RFP or such adjusted plan asmay subsequently be mutuelly agreed between us and the EPFO or its appointed representatives

We egree to unconditlonel acceptance of ell the terms and conditions set out in the RFP documents

We confirm that the information contained In this proposal or any part thereof. including its exhibits, schedliles. and otherdocuments. delivered to the EPFO is true. accurate. and complete. This proposal IIlc/udes all mformal/ot! necessary toensure that the statements therein do not, in whole or in part. mislead the EPFO as to any matenallflct

We heve agreed that (insert Individual authorisad representative's name) wi/lact as our representative on our behalf andhas been duly authorized to submit the proposal.

Further. the authorized signetory is vested with requisite powers to fumish such letter and authenllcate the same

----------------------_ .. ,---.-- .... Request for Proposal/or Appointment 01ECA for audit of investments done by EPFO:S PO/ffolio Managers P••.,qe 27 of 41

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Yours faithfully,For and on bahalf of (/nsert company name)

Authorlsad SlgnatOty

Requast for Proposa' for Appointment of ECA for audit 01 investmants dona by EPFO·s POltfo/fO Managers Page.2 8 of

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8.3 Financial Proposal Covering Letter

(To be forwarded on the letterhead of the Applicant submitting the proposal)

89(:'----------------OBte: _

Sh. M. Hareyanappa,Additional Centrel PF Commissioner-I (IMC and F&A).

Employees' Provident Fund Organization (EPFO).

Shavishya Nldhl Shavan.·

, 14~Shikeiji Came Place,Hew Delhi· 110066

Dear Sir.

Ref: Reque.t for Proposal (RFP): Appointment of External Concurrent Auditor (ECA) for the EPFO's Portfoliomanagers

Having exemined the RFP dOcument. the receipt of which is hereby duly' acknowledged. we. the undersigned. offer to

provide the services as IliJquired Bnd outlined In the Request for Proposal (RFP) for Appointment arECA for the EPFO's

Portfolio managers.

To meet such requirements and to provide services as set out in the RFP document we attach hereto our response asrequired by the RFP document. which constitutes our proposal,

We undertake, if our proposal is accepted. to adhere to the stipulations put forward in the RFP or such adjusted plan asmay subsequently be mutually egreed between us and the EPFO or its appointed representatives.

We unconditionally accept all the terms and conditions set out In the RFP document.

We confirm that the information contained in this proposal or any part thereof. Including Its sched(Jles. Dnd othe,documents delivered to the EPFO is true, accurate. and complete. This proposal includes all mformatlotl necessary te

ensure that the statements therein do not. In whole or in part, mislead the EPFO as to any matEmai fact

We have agreed that (In/lert Indlviduel authorised representative's name) will act as our representat,ve Oil Ollf behalf all(

has bean duly authorized to submit the proposal.

Furthar, tha authorized signatory is vasted with the requisite powars to furnish such letter and aut/lent/cate the snm«

Yours faithfully,For and on bahalf of (Insel1 company nama)

Authoris~ Signatory

--------------------------_ •.... -~.-Request for Proposel for Appointment of ECA for audit of mvestments dona by EPPOs POltlollO Managers Paqe 2901 •

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i. 8.4 Request for clarifications

123..---.,-'" ...•. ~..-..- --....,.

8.5 Format for providing explanations for deviations if any

123

8.6 Format for undertaking

UNDERTAKING(To be given on company letter head)

I. am the Managing Partner I equivalent official of_...;... <company name> ("External Concun-ent Aud;tor'1 haVing Its registered office at

I am authorized to sign and execute this undertaking on behalf of the External Concurrent Auditor for subnllttmg aflI'OPOS8/ pursuant to the request for proposal issued by the Employees' Provident Fund.Orgamzatlon , EPFO" fo~appointment 01Extamal Concurrent Auditor for audit of Investment done by EFPO's portfolio managersI.' on behalf of the External Concurrent Auditor. solemnly affirm and declare that as on the date of application

B. The External Concurrent AUditor has <Number> of Qualified Chartered Accountants working as tuutim« Paltnersb. Tho Extcm:)1 Concurrent I\uditor h,,::; ---Numbcr: .:Jccounting JtDff mvmb.r~ 0/#1\(,1".;),1'0) !v:ll"iiet .""t:Jlj"",/~ vvi,u.,,1:1

chartered accountantsc. The Extemal Concurrent Auditor I any partner has functional offices at Mumbai & Delhi havmg responsible

officials

..Request/or Propo8III/or Appointment of ECA for audit of investment. done by EPFO's Portfol,O Manaqers PfoIqeiO of 41

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d. The External Concurrent Auditor has experience in each of the last <No. of financial years> financial years ending31 March, 2016 in concurrent audit of at least one account of Portfolio Manager having annual turnover at leastRs. ,. 000 Crores

e. The Extemel Concurrent Auditor Is having the -cNo. of years> years of continuDus operations as on 31 March.2018

f. The cumulative experience of partners of the External Concurrent Auditor is <No. of years> aoS on 31 March, 2016g. The averega experience of the proposed execution team in providing the portfoliO audit is <No. of years> as on 31

March. 2016h. The External Concurrent Auditor is empanelled with Comptroller and Auditor General of India (CAG) as on the

deteofRFP

Solemnly affirmed and undertaken on the day and year herein be/ow written. by:

SignatureNameData ., .

't'

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9. Terms and Conditions for Remuneration & Tenure9. 1 The concurrent audit needs to be carried out and its report be submitted to the EPFO on the monthly basis. The

remuneration for carrying out the above aasignments shall be paid on quarterly basis. However. if auditors are

requlrad to travel outside Mumbai as required by EPFO. TAl OA will be paid at the rates applicable to Central

Govemment officers drawing a Grade Pay of s.66001- PM In respect of the Team Leader and at the rates applicable

to Central Govemment officers drawing B Grade Pay of s.54001- PM In respect of the other members of Tesm

9.2 Payment of audit fee and TA I OA applicable. if any. will be made on quarterly basis subjected to receipt of all

monthly audit reports lor the quarter.

9.3 THE APPLICANT ECA MAY QUOTE THEIR FINANCIAL BIO IN LUMP SUM PER MONTH IRRESPECTIVE OFTHE NUMBER OF FUND MANAGERS ENGAGEO BY EPFO.

. 9." Taxes applicable on the selVices rendered by ECA will be bome by EPFO.

9.5 The tenure of ECA will be for three years from date 01 apPOintment which will be extendable further on mutually

agreed terms subject to approval from competent authority. EPFO may remove the ECA in cssen» services are not '

found setlslactory.

Request for Proposal for Appointment of ECA for audit 01 investments done by EPFO's Portfolio Man8fJe,.~ P;.tqe 32 of 41

10. Investment Guidelines for Investments by Fund Managers'. Pattem of Investment, as notified by Ministry of Labour & Employment vide notification {Vo. S. O. 1071 (E) dated 23 April.

2015:

10.1 Investment Pattem

Sr. No. ISecurities I,' Percentage, . amount to brr. llnvestod .

(I)

I.'

I

II. (II)

fI(

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II !II.I(

I

'II

Government Securltl •• and Related 'nvestme".

(a) Govemment Securities,

(b) Other$ecurltles ('Securities' as defined in Section 2 (h) of the Securities Contract (Regulations)Act, 196e) the principal whereof and interest whereon is fully and unconditionally guaranteed by theCentrsl Govemment or any State Govemment.

The pottfoI/o invested under this sub-categary of securities shaH not be In e1Ccessof 10% of the totalportfoHo of the fund ..

(C) Units of Mutual Funds set up as dedicated funds for Investment In Govt. securities and regulatedby the Securities and c1CchangeBoard of India:

Provided that the portfolio invested in such mutual funds shall not be more than 5% of the totalportfoHo at any point In time and fresh Investments made in them shaHnot e1Cceed5% of the freshaccretions in the yeer. .

MinImum 45%and upto'50%

Debt lnatruments and Related Inve.tments

(a) Listed (or proposed to be listed in case of fresh issue) debt securities issued by bodies corporate.InCluding banks and publIC financial institutions (,PublIC Financiallnstllutes, as defined uncter Section2 of the Companies Act. 2013), which have a minimum residual maturity period of three years from,the date of investment. .

Mm/llwr71 35%OM upto 45%

(b) Basel III TIer-I bonds issued by scheduled commercial banks uncter RBI Guidelines:

Provided that In c,se of initi,1 offering of the bonds the investment shall be made only in such Tier·1bonds which are either listed or are proposed to be listed. .

Provided further that investment shaH be made in such bondS of 8 scheduled bank from thesecondary markat or from subsequent plactM'Jent only If the existing Tier·' bonds are "sted andregularly traded.

Tot" portfolio Invested in this sub-category. at any lime. shell not be more than 2% of the totalportfolio of the fund.

No Investment In this sub-category in initial offerings sh,1I exceed 20% of the mltial offering andfurther. the aggregate value of such bonds held by the fund shaHnot exceed 20% of such bondsIssued tilt th,t poin.t in time by that Bank,.(e) Rupee Bonds having an outstanding maturity 01 at least 3 years issued by institutionS 01 theInternational Bank for ReconstructiOn and Development. International Finance Corporation and theAsian Development Bank,

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Sr. No, I sceunues I Pcrcontage, "i I amount. to bO'~ 'j Invested '(dJ Term Oepoait Receipts of not teas thllfl one yesr dUl'ltlon lNued by scheduled commercial banks,which "flsty the foIIowtng conditions on the balis of the published annu,' report(s) for the mostrecent years, 's required to h,ve been published by then unclftr the law:

t. Have declared profit", immediately three precedJng finanCial years:

il. Have m,intained a minimum Capital to Risk Weighted Asse/s Ratio of 9". or as mandated byprevatling RBI noons, whichever is hIgher;

iii. Have net non-performing ,ssets of not more than 4% of the net aclvances;

tv. Have minimum net worth of not less than Rs.200 crores,

(e) Units of Debt mutuel Funds regulated by Securities and Exchange Soard of India:

Provided that fresh investment in Debt Mutual Funds shall not be more then 5% of the freshaCcretions invested in the year and the portfOlio invesled in them shall not exceed 5% of the totalportfolio of the fund at any point in time,

(f) The following Infrastructure related debt Instruments:

(I) Usted (or PfOPOHd to be listed In case of fresh issue) debt seCUrities issued by body corporateengaged mainly in the busine" of development or operation and maintenance of 'nfrastructure, ordevelopment, construction or finance of low coesthouslng,

Further, this category shall also Include securitM, issued by Indian Railways or any of the bodycorporate. In which it has majority shareholdlng.

This calegOry shalf "SO Include securities issued by any Authority of the Govamment which Is not Bbody corporate and has been formed mainly with the purpose of promoting development ofinfrastructure. .

It is further clarified that any structural obligation undertaken or letter of comfort issued by the CentralGovernment, Indian Railways or any Authority 01 the Central Govemment. for any security Issued by, body corporat. engaged in the business of Infrastructure. WhIChnotwithstanding the terms in letterof comfot1 of the obligetion undertaken. fails to enable its inclusion as security covered undercategory (I) (b, above. shalf be treated" an eligible security under thia SUb-category, .

(N) Infrastructure and affordable housing Bonds Issued by any scheduled commercial benk. Whichmeftta the condttfons specified In category (Ii) (d) .~,

(iil) Usted (or proposed to be listed in case of fresh issu.) securities or units iSSued by Infrastructuredebt fuiKIs operating as a Non-Sanking Financial Company and regulated by Reserve Bank of India

(iv) Usted (or Proposed to be listed in case of fresh issue' units issued by infrastructure Debt Fundsoperating as a Mutual Fund and regu/ated'by Securities and Exchange Soard of India

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Sr. No. I Securltl('9 "I Percentage :I I amount to hI)!

! . I Invested

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It I, cJ.rlffed that. barring exception. mentioned, .bove, fOr the purpose of thl, sub-category (f). ,sector sit" be treatefl_ part of Infrastructure a8 per Govemment of IndlB', harmonized master.,i,t ofinfrastructure lub-HCfOII.

Provided thet the investment under sub-categorle. (a). (b) and (f) (I) to (Iv) of this category No. (Ii)shell be made only in such securities Which have minimum AA rating 01equivalent in the applicablerating scale from at least two credit rating agencies registered with Securities and Exchange Soard ofIndia (Credit Rating Agency) Regulation. 1999. Provided (ul1her that in case of sub-category (f}(Hi)the rating shall relate to the Non-Sankfng Financial Compeny and for the sub-categoty (f) (iv) therating shall relate to the investment in eligible securities rated ~ve Investment grade of the schemeof the fund.

Provided further that If the securitleslentltles have been rated by more than two rating agenCies. thetwo lowest of an the ratings shall be considered.

Provided further that Investment under this category requiring a minimum AA rallng. 8S speCifiedabove. ",all be parmissib/e in securities having investment grade rating below AA in case the risk ofdefault forsuch securities is fully covered with Credit Default Swap. (COS') issued under Guidelinesof the Reserve Bank of India and purchased along WIth the underlying securities. Purchase amount ofsuch sweps shall be considered to be investment med. under this category,

FOI lub-cetegory (c), a single rating of AA or above by a domestiC or International rating agency will"e acceptable.

It Is clarified that debt securities covered under categoty (i) (b) above are excluded from this category(iI).

I. (.,

:I;II (ili) Short·tenn Debt Instrumente and Related Investments

(a) Money market instrument.:

Provided that investment In commercial paper issued by body corporate shall 6e made only in suchinstruments which have minimum ratl,ng of A 1+ by at least two credit rating agencies registered withSecurities and .Exchange Boara of India.

Provided further thet if commelCla/ paper has been rated by more than two rating agencies. the twolowest of the ratings shall be COfIsjdered.

ProvIded further that investment in this sub-cst8Q9tY in Cel1ificates of Oepoait of UP to one yearduration issued by scheduled commercial banks. will require the bank to satisfy aN conditionsmentioned in category (N) (d) above.

(b) Unit. of liquid mutual fund. regulated by Securities and Exchange Board of India.

(c) Term Deposit Receipts of u" to one year duration issued by such scheduled commercia; bankswhich satisfy all conditiOns mentioned in. category (ii) (dJ above .

UplO 5%

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'Sr. No. I socurtttos ." , . I Porcontag9': ~ 'I amount ta baI (mostod:

(Iv)

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Equltln and Rel.tedlnveatmenls

(a) Shares of body corporates listed on Bombay Stock Exchange (SSE) or National Stock Exchange(NSE), whichh,ve;, .

(i) Market capitalization 01not less than Rs. 5000 crore 8S on the date of investment. and

(Ii) Derivatives With the share.a. underlying. traded in either of the two stock exchanges

(b) Units of mutual funds regulated by Securitie. and Exchange Soard of India, which have minimum65" of their investment in shares of body corporate listed on SSE or NSE,

Provided that the aggregate portfolio Invested in such mutual funds shall not be In excess of 5% ofthe total portfolio 01 the fund at any point in time and the fresh investment in such mutual funds shallnot be In excess of ~" of the fresh accretion. invested in "'e year.

(c) Exchanged Traded Funds (ETFS)/lndeX Funds regulated by Securities and Exchange Board ofIndia that replicate t"eportfolio of either sse Sensex Index or NSE Nifty 50 Index,

(d) ETFs Issued by SEel regulated Mutual Funds constructed specifically lor disinvestment ofshareholding 01 the Government 01India in body corporates,

(e) Exchange traded derivatIVes regulated by Securities and Exchange Board of India having theunderlying of any permissible listed sloc/( or any of the permiSSible indices, with the sole purpose ofhedging. .

Provided "'atthe porlfollo Invested in derivatlvas in terms of contract valtie shall not be in excen of5% of the totel portfolio invested In sub-categories (e) to (d) above.

Asaet Backed, Trust Structured and Miscellaneous Investments

(a) Commercial mortgage based Securities or Residential mortgage based securities,

(b) Units ISsued by"" Real Estete Investment Trusts regulated by Securities and Exchange Board ofIndia.

(e)Anet SaclcedSecurities regulated by Securities and Exchange Board 01 Inella,

(d) Unit. of Infrastructure Investment Trusts regulated by Securities and Exchange Soard of India,

Provided that Investment under this category No. (v) shaNonly be in listed Instruments or freshislUesthat aIW propoMd to be Itsted.

Provided further that investment under this Cltegory shill be made only in such secunties which haveminimum AA or equivalent rating In the applicable rating scale from at least two credit rating agenciesregistered by Securities and Exchang. Soard of India under Securities and Exchange Board of India(Credit Rating Agency) Regulation. 1999, Provided further that in case of SUb-cltegones (b) and (d)the ratings shall refate to the rating of the sponsor entity noating the trust. .

Provided further that If the securities/entities have been rated by more than two rating agencies, thetwo lowest 01 'he rating shall be considered.

Minimum 5%andupto 15%

Up/o 5%

10.2 Fresh accretions to the fund will be invested in the permissible categories specified in this investmont pat/em in amanner consistent with th~ above specified maximum permissible percentage amounts to be invested In escnsucn

investment category. while also complying with such other restrictions as made applicable for venou« sub-

categories of the permissible investments.

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10.5

10.6

I: I 10.7

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10.3 Fresh accretions to the funds shall be the sum of un-invested funds from the past and receipts like contributIons to

the funds, dlvldendlinterestleommisslon, maturity amounts of earlier Investments etc.. as reduced by obliga/ory

outgo during the financial year.

lO.4 Proceeds arising out of exercise of put option. tenure or asset switch or trade of any asset before maturity can be

Invested In any of the permissible categories described above in such a manner that at any given point of time the

percentege of assets under thlt eategory should not exceed the maximum limit prescribed for that category ttnd

also should not exceed the mexlmum Ifmll prescribed for the sub-cetegories. if any. However. asset SWItchbecDuse

of eny RBI mandated Govemment debt switeh would not be covered under this restriction.

Tumover retio (the value of securities traded in the year/average value of the portfolio at the beginning of the year

and at the end of the year) should not exceed two.

. If for any of the instruments mentioned above the rating falls below the minimum permissible investment grade

prescribed for investm~nt in that instrumant when it was purchased. as confirmed by one credit rating agency the

option of exit shall be considttrad and exercised. as appropriate. in a manner that is in the best interest of the

subscribers.

'On these guidelines coming into eHect. the above prescribed investment pattem shall be achieved sf-!J)arately for

such successive financial year through finely and appropriate planning.

The Investment of funds should be at arms length. keeping solely the benefit of the beneficiaries III mmd For

instance. investment (aggregated across such companies I organizations described herein) beyond 5% ot tne fresh

accretions In a financial year will not be made in the securities of a company I organization or in the securities of a'

company/organization In which such a company / organization holds over 10% of the securities issued. by a fund

created for the benefit of the' employees 01 the first company / organization. and the total volume of such

Investments will not excaed .5% of the total portfolio of the fund at any time. The prescriiJed process of duediligence muat bestrlctly followed in such cases and the securities In question must be permiSSible investments

under these guidelines.

10.9 I. The prudent investment of the Funds of a trustAund within the prescribed pattem is the fiduciary responSibility of

the Trustees and needs to be exercised with appropriate due diligence. The Trustees would accordingly berespontllble for investment decisions teken to invest the funds.

ii. The trustees will take suitable steps to control and optimize the cost of management of the fund.

Iii. The trust will ensure that the process of investment is accountabl~ and transparent.

iv.1t wiN be ensured that due diligence is carried out to assess risks associated with any particular asset before

investment Is made by the fund in that particular asset and also during the period over which it is held by the fund .

The requirement of ratings as mandated in this notification' merely intends to limit the risk aSSOCiated With

investments at a broad and general level. Accordingly. it should not be construed in any manner as an

endorsement for investment in any asset satisfying the minimum prescribed rating or a substitute fOf the clue

diligence prescribed for being canled out by the fundlfrust.

v Th,. tnl.~'''"nrl .~hf'lllfrl "r.fClpt and Implem~nt prudent guidclinc:; :0 prcvcn: CDr;ccntrClti.:in .:if 1Ii~~~I"'f1/1;'" (I">' \/.11"

company. corporate group or sector.10.10" the fund has engaged services of professional fundlasset mansgers for management of its assets. payment to

whom is being made on the basis of the value of each transaction. the value of funds invested hy tnen» In any

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mutual funds mentioned in any of the categories or ETFs or Index Funds shall be reduced before computing the

payment due to them in order to avoid double incidents of costs. Due caution will be exercised to ensure that the

same Investment are not churned with a view to enhancing the fee payable. In this regard. commissions for

investments in Category (III) Instruments will be carefully regulated, in particular.

Note: The exl.tlng Inve.tment pattern a. above I•• ubJect to change ba.ed on the notifications Issued by theGovernment of India from time to time.

10.11 Investment Restriction.

10.11.1 Investment decisions should be taken by Portfolio Manager with maximum emphasis on safety. pfll<JellCe

optimum retum, sound commercial judgment and avoiding funds to remain idle.

10.11.2 Any moneys received on the maturity of earlier investments reduced by obligatory outgoings shall be

invested In' accordance with the invastment pattern. The investment pattern may be achieved by the end of

a RnanCialyear.

10.11.3 In case of any instroments mentioned above being rated and thair rating falling below prescribed mlnl/HII'"

rating, then the option of exit can be exercised with the prior approval of CBT. EPF.

The Investment should be made by the Portfolio Manager through a Stock Exchange. or direcuv WillI otner

counterpart/es in respect of Government Securities and other debt Instruments at the best possible ,ale

available on the day of transactions. Portfolio managers shall not purchase or sell secuntles exceedmg 5

per cent or more. through any broker, of the aggregate purchases and sales of secuntles made bv the

Fund, unless the Portfolio Manager has rec.orded in writing the justification for e)(c~eding the aforesaId II/nIt

and reports all such Investments to the EPFO on a quarterly basis. The aforesaid limits o( 5 per cent shall

apply for a block of three calendar months on a monthly rolling basis. The Portfolio Manager shall ,,6t uuuz«

the services of the sponsor or any of its associates, employees or their relatives, for the purpose of any

securities transaction a,nd distribution and sale of securities. Provided that a Portfolio Manager may utmz«such services with the prior approval of CBT. EPF If the prescribed limit as per the CBT Investment

guidelines is to be exceeded. However. Investments can be made In primary market issuances If! wmcn thesponsor or any of its associates or its aSSOCiatebrokers Is one of the Lead Managers. provided tMI'p. IS

consensus with all other selected Portfolio managers to invest in that issuance and the Portfolio Manage,

(whose sponsor or any of Its associates or Its associate brokers is one of the Lead Managers) do~.<; nol

subscribe to more than 50" of the issue size,

10.11.4 CST, EPF Funds shall not be used to buy secunUesibonds held by the Portfolio Manager or Its sooseu.vv "

their own investment portfolio or any other portfolio held by them.

10.11,5 The Portfolio Manager shell buy snd sell securities on the basis of deliveries ..and shall In a/l cases apurenase. take delivery of relative securities and in all cases of sale, deliver the secunties and sllall III /I(

r.1f~ftput itself in a position whereby it has to make short sales or carry forward transactions

10.11.6 The Portfolio Manager shall enter into transactions relating to Sacurities only in dematenollzed torm TlI

Portfolio Manager shall. for securities purchased in the non-depository mode get the secuflues trensteur:

in the name of the CBT. EPF on account of the Scheme.

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10.11. 7 Pending deployment as per investment objective. the moneys under the respective Schemes may l'9

Invested in short-term deposits of Public Sector Sanks acceptable to the CST, EPF.

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CSTCO.EC!,EDLIEPFEPFOEPSFA&CAOGOIMoL&EN.A.

RBIRPPSESITOR

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11. Glossary: Assets Under Management: Central Board of Trustees; Compact Disc: Extemal Concurrent Auditor: Employees' Deposit Linked Insurance Scheme, 1976

: Employees' Provident Fund Scheme, 1952: Employees' Provident Fund Organizetion: Employees' Pension Scheme, 1995

: Financial Advisor and Chief Accounts Officer: Govemment of India: Ministry of Labour and Employment: Not Applicable: Reserve Bank of India: Requast for Proposal: Securities and Exchange Board of India: renn Deposit Receipt

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Contact Details:

Sh. M. Narayanappa,Additional Central PF Commlssloner-l (IMC and F&A).Employees' Provident Fund OIVanizat/on (EPFO).8havl8hy. NldhlShavan,14. Bhlkaiji Cama Place,New DeIhl· 110066Phone: 011·26172660.Fax: 011·26194349EmaHId - 8Cc.fa.imc@epfindla,QOII,in

-------------------------_ ... _ .._-Request for Proposal for Appointment of ECA lor tlUdit of investments done by EPFO's Portfolio Manager.s Pnae «: I).' .; ,

Item No.1+. Model Agreement on Banking Agreement between the Central Board,EPF and Nationalized Banks in respect of funds belonging to andunder control of the Central Board. ~.

An agenda item was placed in 205th Meeting of the CBT held on 19.12.2014,wherein it was proposed that the CBT, EPF may approve suitable amendments in Para38(1) and Para 48 of the EPF Scheme, 1952 to enable EPFO to receive contributionsthrough Scheduled Conunercial Banks in addition to SBI. The CBT, EPF had, however,approved the proposal with the modification that it be restricted only to Public SectorBanks.

2. In compliance to the decision of the CST, the Government of India, MoL&E videnotification GSR No. 360(E) dated 05.05.2015 has amended, the provisions of Para 38(1)and 48 of EPF Scheme, 1952' making other Nationalized Banks also eligible forcollection of contributions from employers, Consequent to amendment in Para 48 of EPFScheme, 1952, all Nationalized Banks were requested to submit their consent to providecustomized services to EPFO for its collection at the rate prescribed by RBI for conductof government business. In response, 24 nationalized banks (which include 5 SBI', .associates) have expressed their willingness for the same.

3. Thereafter, a model agreement has been drafted for conducting the business withNationalized Banks other than SBI. Nationalized Banks will be authorized for onlinecollection of contribution, dues, damages, remittance, payment or charges payable to theCentral Board by an employer, an establishment, a person or any other entity, havingBank account with this Bank and making payment out of this Bank account only. Theagreement may be signed only after a receipt of a report from IS Division that th~technical trial run with a particular bank has been done successfully and the systein isready to accept the payment them.

Proposal: The FIAC may approve the said banking agreement to be entered bythe Central Board with aUNationalized Banks, other than SBI.

IIPage

BANKING AGREEMENT BETWEEN

THE CENTRAL BOARD

AND

THE ......•......•.•.•;=,~•••••:'· •••.•:,"'-- ••••..··.,($'~$.tONAtI.l)~BAN1QIN RESPECT OF FUNDS BELONGING TO AND UNDER THE CONTROL

i

OF THE CENTRAL BOARD

This Agreement is entered into between:

The Central Board, a body corporate .created under Section SA of theEmployees' Provident Funds and Miscellaneous Provisions Act, 1952(hereinafter referred to as the 'Act') having its Headquarters at 14, BhikaijiCama Place, New Delhi - 110066. The Central Board shall hereinafter bereferred to as "the Central Board" which term shall include its successors andassignees"; and

" .'.lk~.tionaliz~·ll~}f'a body corporate constituted under theBanking C uisition and Transfer of Undertakings) Act, 1970having its . '" . ,. (hereinafterreferred to as "the Bank" or .' which termshall include its ,successorsand assignees.

The Central Board may also be referred to as "The First Party" and is beingrepresented by the Financial Advisor and Chief Accounts Officer (FA&CAO)(created under sub-section 2 of Section SD of the Act).

The Bank of."~::;;::~~;)_l:10NA't,iW"";~~)may also be referred to as "TheSecond Party" and is being

.":':'~"~~i4~~,~}~,<" '; ;.:.,':iri?j":ilfi~;\.< .::c . ,:> •.•;.

represented by"' ,.'

,.The First Party and the Second Party are hereinafter collectively referred to as .."the Parties".

WHEREAS:

A. The Central Board administers the Act and the Schemes framed thereunder andmanages Funds created under the Act and the Schemes framed thereunder and,such Funds vest withthe First Party. Administration of the Act and the Schemesframed thereunder and management of such Funds includes,inter alia collectionof contributions, dues, damages, remittances, payment or charges known by anyother name, prescribed under the Act and the Schemes framed thereunder asspecified from time to time from an employer, an establishment, a person or any I'

other entity who from such dues, damages, remittances or charges are payable, •investment of such Funds and making payment out of such Funds as per t~eprovisions of the Act, the applicable Schemes, rules or orders.

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• B. The Bank is engaged in the business of providing to itscustomers Banking services. The Bank also provides online Bankingservices where its customers are provided Banking facilities which includesonline direct debit to its customer account through internet Banking.

C. The Parties are desirous of entering into a mutual arrangement whereby anemployer, an establishment, a person or any other entity, having an account withthe Bank, can remit contribution, dues, damages, remittance, payment or charges '.into the accounts of the Central Board maintained by the Bank. by using themedium of online internet Banking services of the Bank. Further, the Bank shalltransmit or pay of such collected amount into the accounts as per the' terms ofthis agreement or the instructions of the Central Board.

D. The Bank has made .an offer to the Central Board to provide Banking services .and other services which are collateral or ancillary to such Banking services tothe Central Board for holistic implementation of the instant agreement.

E. The' Parties wish to enter into this Agreement to set out the general tenns andconditions urider which the Bank will provide electronic payments collection,transmission, processing and settlement services to the Central Board: Inconsideration of the mutual covenants and agreements set forth in thisAgreement and other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, the Parties hereby agree asfollows:

NOW IN CONSIDERATION OF THE MUTIJAL C.OVENANTS ANDUNDERTAKINGS HEREIN THE PARTIES AGREE AS FOLLOWS:

1. Bank Accounts of the Central Board:

1.1 The Central Board shall maintain and operate a Bank account with a prominentbranch of the Bank at New Delhi as decided by the Central Board. This Bankaccount shall serve as central Bank account for online collection ofcontribution, dues, damages, remittance, payment or charges payable to theCentral Board by an employer, an establishment, a person or any other entity,having Bank account with this Bank and making payment out of this Bank,account.

1.2 The Central Board may open as many Bank accounts with the Bank as requiredby it. The nature, number or location of Bank accounts of the Central Boardshall be decided by it and communicated to the Bank which shall comply withsuch decision of the Central Board and communicate the same to it.

2. Only an employer, who has this Bank as his Banker, shall be pennitted to make,payment from his Bank account with this Bank, to the designated central Bankaccount of the Central Board with the Bank.The payment to be collected by the Bank shall be electronically through internetbanking and no other mode such as negotiable instrument, cash payment or the .like. .

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• 3. To make a payment, an employer will log into THE BANK by feeding pre-existinguser ID and Password and after login he will be guided as to the procedure to makethe payment to the Central Board.

4. Electronic Challan-cum-Receipt (ECR) as prescribed from time to time, shall befiled by the employer, wherever required under applicable procedure, alongwithpayment.

s. The Bank shall receive, directly from an employer, in the central Bank account ofthe Central Board maintained with the Bank, the sum as per ECR remitted by theemployer electronically through internet banking and shall credit the amount in thecentral account on the same day.

6. All payments authorized by the Central Board to be made to a beneficiary, havingthrough online medium Bank account with this Bank, shall be made out of thecentral Bank account.

7. In case of a situation where payment authorized to be made exceeds the amountlying in credit in the central account, Over Draft (00) to the credit of the CentralBoard shall be utilized. .

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8. Payment to Beneficiary and Overdraft Facility:8.1 Payment shall be made to a beneficiary as per payment advice issued by the .

Central Board ro the Bank.8.2 THE CENTRAL BOARD may make any specific debit or credit advice

through a written communication and the Bank on receipt of suchcommunication shall give effect to the content of such communication.

8.3 No advice or instrument issued by the Central Board shall be dishonoured on. .account of insufficiency of amount in credit in the Central Account of the 'Board maintained with the Bank.

8.4 The Bank hereby extends overdraft (00) facility to the Central Board againstfixed deposit (FD) made by the Central Board with the Bank. The. quantum orouter limit of 00 shall be decided mutually by the parties based on the :requirement from time to time.

8.5 Rate of interest on 00 ayailed shall be half a percent per annum higher thanthe interest rate allowed on such FO~

8.6 In case, at any point in time, the Bank is required to effect a payment adviceissued by the Central Board and the payment to be effected is not fully coveredby the amount at credit in the Central Account of the.Central Board, the Bankshall honour such payment advice in full by utilising the 00 facility extendedby the Bank to the Central Board.

8.7 . The extent by which such payment exceeds the sum total of the amount at thecredit in the Central Account at the time of payment and the outer limit of the00, shall be covered by additional 00 extended by the Bank to the CentralBoard.

8.8 Rate of interest chargeable on such additional 00 shall be one percent perI·

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• annum higher than the interest rate allowed on such FD.8.9 Every OD invoked and availed by the Central Board shall be squared off

through future accrual to the Central Account of the Board maintained with theBank.

9. TRANSfER TQ LD~FFERENTOeii}Q1:-;3dnifiiiii_nvestmentAccountsof tlteCenttfil BOgdFand RTGS Charge!:

9.1 The Bank shall, on every working day, remit the balance lying in the CentralAccount with the Bank, to ft)t~;~mf(eren~;~Wl~;A<hDinJ$ttat1oXilInvestmentAccounts namely, Employees' Provident Fund Central Administration Account,Employees' Provident Fund Investment Account, Employees' Pension FundInvestment Account, Employees' Deposit Linked Insurance Fund CentralAdministration Account, and. Employees' s: Deposit ...Linked ..Insurance Fund.Investment Account. oft,he eeltl:lil?:'iJ3~~mldbf:j;~~;';~t~{anybank(s):sospecifie'd'bythe Central930atd. Such transfer shaH be done through the firstRTGS cycle of the day. If the amount to be so transferred is inadequate to betransferred through RTGS, the same shall be transferred using NationalElectronic Fund Transfer (NEFT) leaving a Zero Balance after such a transfer.

9.2 The amount received in the central account of the Central Board after thetransfer made in a~tr..t,:,~~1taffQh/hive$lin~a¢coUD.t$Qf/;tiliybank(s) sospecifie(lJ)YJY.~fC~niiih;:J.as per clause. 9.1, shall be remitted to therespective Central Investment Accounts of the e.~attal'Boaru:;~tnt8.ihedat: anybank(s) $o:speeifled by:tli~:'e~tialBoard,through the first RTGSINEFT cycleof the next working day. .

9.3 For every transfer of balance amount. effected by the Bank through RTGS orNEFT, in fulfillment of the instant agreement, shall be charged by the bankfrom the Central Board. The charges reimbursable to the bank shall be as percharges for RTGSINEFT notified by RBI from time to time. The Bank shallmaintain a record of all particulars and such charges payable as per ratesnotified by RBI, the same shall be claimed from .the Central Board bycompiling and collating the full details of RTGS or NEFT charges.

9.4 Maintenance, compilation and collation of details of RTGS or NEFT detailsand charges, making claim fromthe Centra) Board payment, dispute regardingclaim made, time .limit applicable for payment of agreed sum and resolution ofdispute and all other related matters shall be guided by the same procedure asapplicable for service charges claimed by and payable to the Bank.

Concurrent with the ·5.lSter;olmfAccountS of'· . .... . ..' . ... .. -: , .' the Bank shallcompile and collate the complete detail of all collections and all payment in theprescribed format and communicate the same to the Central Board throughSFTP and e-mail oranyothersecuredtransmissionchannelasmutual1yagr.ee~

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by the parties.lO.2 THE BANK will reconcile all receipts in its Nodal Account maintained .for

collection of online payments. THE CENTRAL BOARD will verify thePayments details received in the MIS with the credits in its Nodal Accountevery day. In case of any un-reconciled payments, THE CENTRAL BOARDwill inform the Bank for resolution of discrepancy. 'l

10.3 Due acknowledgment in writing or through electronic mail by THE CENTRALBOARD will be given for the MIS sent.

If the Bank fails to credit the amount remitted by the employer of theestablishment into the Central Account of the Central Board as per the time liegiven under para 5 OR also.fails to transfer the ,balance lying with the CentralAccount to five different Cehfrif·i;~~tioblinvestmbif···'AecOUntsmainb.lined;it;~YJ:'''ai1k(~1i~t_ea'.Jn.f;iji~;~en~aJ;,ao~ 'as per time line.given in para 9.1 & 9.2, the delay shall attract payment of interest for delayed .credit/transfer. as the case may be, at prevalent Bank Rate plus 2% and wouldbe credited in the respective account of the Central Board every month.. .

11.2 Complete detail of the amount remitted belatedly alongwith interest paid on:such belated transfer shall be communicated to the Central Board at the closeof every calendar month.

t2.Charges to be paid for delayed trans,er;12.1 A dispute shall arise if the Central Board communicates to the Bank that the

interest paid on account of delayed transfer isless than what is agreed under theinstant agreement.

12.2 Any dispute regarding calculation of interest on delayed credits and itspayment shall be settled within one month by the parties.

12.3 If such a dispute is not resolved within the specified time of one month sincethe dispute came to being, the Central Board shall be entitled to recover, for theperiod starting from the date when the interest on delay in credit became duetill its actual credit in the respectiveaccounts of the Central Board. Delayedperiod interest shall be charged from the bank at prevalent Bank Rate plus 2%.The delay period calculation will start from the day following T+ 1 workingday.

12.4 The Bank shall not be liable to pay the penal interest, if the cause.for the delayis attributable to the Central Board.

13.Service Charges Payable on Collectiog of Fund:13.1 THE CENTRAL BOARD shall pay to the Bank, service charges for collection

of fund by the Bank in the Central Account of the Central Board.

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13.2 No service charge shall be payable for any payment made out of the centralaccount of the Central Board maintained with the Bank.

13.3 The service charge payable shall be calculated based on the number of receipttransactions made in the Central Account of the Central Board maintainedwith the Bank. The quantum of amount involved in each transaction shall beof no consequence for calculation of service charge. One challan consistingamount of five or less accounts of EPFO shall be treated as one transaction.The Bank shall be paid service charge as per the rate prescribed, from time totime, by the Reserve Bank of India (RBI) for an agency Bank for collectingpayment on behalf of Central Government. At present, the rate prescribed byRBI is twelve Rupees for every receipt transaction.

13.4 Service charge payable to the Bank shall be calculated by the Bank for eachcalendar month and the same shall be transmitted with full details and in all

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particulars to the Central Board as soon after the conclusion of the calendarmonth as possible for the Bank.

13.5 Service charge due to the Bank for each calendar month shall be examined bythe Central Board for its correctness or accuracy. If the claim made by theBank is found in order, the Central Board, within fifteen days, and if thefifteenth day happens to be a holiday either for the Central Board or the Bank,by the next working day for the Central Board and the Bank, of the receipt ofthe claim. shall communicate its approval· to the Bank for debiting thespecified amount as service charge from the central account of the CentralBoard.

13.6 Service tax, surcharge, levy or any other statutory payment payable by the' .!Bank over the service charge, shall also be reimbursed to the Bank by theCentral Board in the same manner as if it is part of the service charge.

13.7 A dispute shall deemed to have ~en if the Central Board communicates tothe Bank that the service charge payable as calculated and communicated bythe Bank is higher than what is due as per the instant agreement.

13.8 Any' dispute regarding calculation of <servicecharge and its payment shall besettled within one month by the parties.

13.9 The Central Board shall be under no obligation to pay any interest for theperiod such service charge could not be paid on account of unresolved dispute.

13.10 In no case the Bank shall debit the central account of the Central Board for the ,service charge purportedly payable by the Central Board unless the payment·of the specified amount of service charge is approved by the Central Boardand communicated to the Bank. ';.

14.Data Security:14.1 The Parties will mutually work for implementing the mechanism for secured

data transmission af1';'~'wi1labide by the relevant rules, regulations, requirementsor guidelines on technical, security or confidentiality standards applicable tothe conduct of transactions contemplated under this Agreement.

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14.2 The Parties will mutually work for implementing the mechanism for Securitymeasures and resultant hardware or software upgrades to comply withthe Payment Mechanism and services provided by the Bank.

14.3 The parties wiII take all precautions as may be feasible to ensure that there isno breach of security and integrity of the link between THE CENTRAL·BOARD portal and the Bank's systems is maintained at all times. THECENTRAL BOARD will ensure that the users upon accessing the link are truly.and properly directed to the Bank's login page. Without prejudice to thegenerality of the aforesaid, THE CENTRAL BOARD will routinely and at such'time intervals as may be specified by the Bank or a service provider designatedby the Bank, check the integrity of the link and provide such reports as may berequired by the Bank or the service provider designated by the Bank from timeto time.

15.lndemnitv:15.1 THE CENTRAL BOARD will, at its own expense, indemnify. defend and hold.

harmless the Bank and its officers, directors. employees, representatives, agents .respective directors, and assignees from and against any and all liabilityincluding but not limited to liabilities, judgments. proceedings, damages.losses, penalties, claims, any other loss ~hat .may occur; howsoever arisingdirectly or indirectly as a result of any breach or non-performance by THECENTRAL BOARD of any of their undertaking, warranty or obligation underthis Agreement or any claim or proceedings brought by THE CENTRALBOARD against the Bank in respect of any product or services or any act.neglect. or default of THE CENTRAL BOARD, or its agent, employees or anyother claim by any other party against the Bank in respect of sale of theproducts or providing services or performance of this Agreement.

15.2 THE Bank will, at its own expense, indemnify, defend and hold harmless theCentral Board and its officers. employees, representatives, agents and assigneesfrom and against any and ail liability including but not limited to liabilities,judgments, proceedings, damages, losses, penalties, claims any other loss thatmay occur, howsoever arising directly or indirectly. as a result of any breach ornon-performance by the Bank of any of their undertaking, warranty orobligation under this Agreement or any claim or proceedings brought by theBank against the Central Board in respect of any product or services or any act.neglect. or default of the Bank. or its officers, directors, employees,representatives, agents respective directors, and assignees or by any other partyagainst the Central Board in respect of sale of the products or providingservices or performance of this Agreement. .

16.Confidentiality:16.1 Subject to provisions of Right to Information Act and other provisions of law applicable for'

thetimebeing.the Parties acknowledge and agree that all tangible and intangibleinformation obtained. developed or disclosed including all documents. data

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papers and statements and trade secret of either Party relating to its businesspractices and their competitive position in the market place provided to theother Party in connecticn with the performance of its obligations under thisAgreement shall be considered to be confidential and proprietary information("Confidential Information "),

16.2 The Confidential Information including all data. documents. papers andstatements will be safeguarded and the Parties will take all the necessary actionto protect it against misuse. loss. destruction. alterations or deletions thereof. Inthe event of a breach or threatened breach bv either Party of this section.monetary damages may not be an adequate remedy; therefore. the other Partyshall be entitled to lniunctive relief to restrain the party committing the breach,from any such breach, threatened or actual.

16.3 The receivlna party shall not be liable for disclosure or use of any confidentialinformation if the same:a. Is in or enters the public domain.b. Is known to the receiving Party at the time of first receipt. or thereafter

becomes known to the receiving Party prior to such disclosure withoutsimilar restrictions from a source other than the disclosing Party. asevidenced by written records.

c. Is disclosed pursuant to any law or order of any court or regulatoryauthority having jurisdiction over the receiving Party.

d. The receiving party for the purpose of this clause hereinabove would bethe Party to whom any such Confidential Information, including alldocuments. data papers and statements etc., has been disclosed by theother Party.

17. Force Majeure:17.1 Notwithstandina anvthinz contained in this Agreement, the Parties shall not be

liable for any failure to perform any of its obligations under this Agreement iftheperformance is prevented. hindered or delayed by a Force Majeure event asdefined below and in such case its obligations shall be suspended so long as theForce Majeure Event continues. ' .

17.2 Each Party shall promptly inform the other of the existence of a Force M.ajeureEvent and shall consult together to find a mutually acceptable solution.

17.3 "Force Maieure Event" means any event due to any cause beyond thereasonable control of the Party. includins; without limitation. unavailability ofany communication system. sabotaze. fire. flood. explosion. Act of God. civilcommotion, strikes or industrial action of any kind, riots, insurrection, war oracts of government.

18.Termination of Agreement:;

18.1 This azreement shall be in force for a period of three year from the date ofsj~nin~ of the agreement, After completion of three vears period. thisasreement shall automatically renew for a further period of one year unlesseither party zives the other party notice in writing of non-renewal at least onemonth prior to the termination date.

18.2 The parties shall be entitled to terminate this agreement without assigning any

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reason by giving notice of three months.18.3 ,The termination of this Azreement shall be without prejudice to the accrued

ri2hts and obliaations of the Parties and all such accrued rights and obligationsshal} remain i~ fu~1 force and effect and be enforceable not withstanding suchexpiry or termrnanon,

18.4 Upon the termination or expiration of this Agreement for any reason .whatsoever, either party shall;a. Immediately refrain from any action that would or may indicate any

relationship between it and either party.b. Immediately cease to use in any manner whatsoever the trademarks. name

of either party or its corporate logo in any future correspondence orcommunications.

c. Forthwith hand over to either party the possession of all documents.material and any other proeertv belonging to either party that may be inthe possession of the either party or any of its employees. agents orindividuals assigned to perform theservlces under this Agreement.

19. Settlement of Dispute:19.1 All disputes or differences whatsoever arising between the parties shall be

settled amicably, If. however. the parties are not able to solve them amicably.the same shall be settled by Arbitration as per The Arbitration and ConciliationAct, 1996 as amended from time to time. '

19.2 The Award made in pursuance thereof shall be binding on the parties.19.3 The place of arbitration shall be Delhi.

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20. Representation and Warranties by Parties: ,20.1 THE CENTRAL BOARD and the Financial Advisor and the Chief Accounts

Officer, who appends signature, to this agreement, hereby undertakes, aftinnsand agrees that it/he/she has full power and authority to enter into thisAgreement and to take any action and execute any documents required by the'terms hereof; and that this Agreement. entered into has been duly authorized byall necessary authorization proceedings, has been duly and validly executed .and delivered, and is a legal, valid, and binding obligation of, enforceable inaccordance with the terms hereof; and that the executants of this Agreement areduly empowered and authorized to execute this Agreement and to perform allits obligations in accordance with the terms herein.

20.2 THE BANK and the <l>fStIiiMtOtl> who appends signature to this agreement.hereby undertakes, affirms and agrees that itlhelshe has full power andauthority to enter into this Agreement and to take any actionand execute 'any documents required by the terms hereof; and that thisAgreement, entered into has been duly authorized by all necessaryauthorization, proceedings, has been duly and validly executed and delivered. I

and is a legal, valid, and binding obligation of, enforceable in accordance with .the terms hereof; and that the executants of this Agreement are dulyempowered and authorized to execute this Agreement and to perform all its

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obligations in accordance with the terms herein.

21.Miscellaneous Provisions, Terms and Conditions:21.1 This MOU has been signed in duplicate, each of which shall be deemed to be

an original.

21.2 It is agreed that both the parties will share an escalation matrix for (I)Technical support (2) Refunds (3) Risk (4) Accounts. .

21.3 THE BANK will make provisions for all time dedicated technical supportduring the currency of Agreement and Helpline Telephone No. will beprovided all the time (24X7) every day throughout the year.

21.4 Unless otherwise provided herein, all notices or other communications under orin connection with this Agreement shall be given in writing and may be sent bypersonal delivery or post or courier to the registered office address mentionedhereinabove in the Agreement. The communication to a party can also be made,through electronic medium by the persons authorized for this purpose by theother party.

21.5 The invalidity or unenforceability of any provisions of this Agreement in anyjurisdiction shall not affect the validity, legality or enforceability of theremaining provisions of this Agreement in such jurisdiction or the validity,legality or enforceability of this Agreement, including any such 'provision, inany' other jurisdiction, it being intended that all rights and obligations of theParties hereunder shall be enforceable to the fullest extent permitted by law.

21.6 Neither Party may assign, in whole or in part, the benefits or obligations of thisAgreement to any other. person without the prior written consent of the otherParty.

21.7 The Parties hereto have agreed that their respective rights and obligations .withregard to their business relationship between them inter se will be interpreted,acted upon and governed solely in accordance with the terms and conditions ofthis Agreement.

21.8 The expression "Central Board" shall include to mean its offices, officers orrepresentative as the context may demand.

21.9 THE Parties may display the following clauses on its Portal/website.i. Terms & Conditionsii. Privacy PolicyHi. Refund andCancellation Policyiv. List of products I services offered and their pricingv. Contact Us

IN WITNESS WHEREOF the parties hereto have executed this MOU (in duplicate) .on the day, month and year first hereinabove mentioned. .

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A. Signed and Delivered by the withinnamed

THE CENTRAL BOARD by the hands of itsAuthorized

B. Signed and Delivered by the withinnamed

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• Portfolio Yields (80% weicht)performance.

Hlaher the yield, better score in overall

Ite;;;fp'""'erformanceEvaluation of Portfolio Managers for the period 01.04.2016 to 30.06.2016.

1. The Central Board of Trustees in its 207th meeting held on 31.03.2015 approved theappointment of following five fund managers for managing the EPFOcorpus for a period ofthree vears:' 41

i. State Bankof India.Ii. ICICISecurities Ptimary Dealership Ltd.iii. RelianceCapitalAssetManagement Ltd.Iv. HSBCAsset Management (India) Private Ltd.v. UTIAssetManasement Company ltd.

TheNewPortfolio Managers started managins EPFOcorpus from 01.07.2015.

2. Further, the Central Board of Trustees in its 204'" meeting held on 26.08.2014 had alsoapPointed CRISll as a Consultant for Selection of New Multiple Fund Managers and theirPerformanceEvaluation.

3. The performance of all Portfolio Managers for the period 01.01.2016 to 31.03.2016 hasalreadyplaced in 12Sthmeetlng'of FIACheld on 22.07.2016.

4. CRISILevaluates the performance of the four portfolio managers of EPFOon the basis offollowing crlteria:-

• Asset Quality (2crJ6 weicht) - Asset Quality Is measured uslna the credit qualityscoring mechanism atlotted by CRISILto each security In the Portfolio. G-Secbeingrisk free, have lowest credit score and corporate Bonds are aSSignedprosresslvelyhigher score basedon ratings. Lower the score better Is ranking.'

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L(I) The cumulative performance of the PMs baslnl on a•••.epte performance score

and portfolio yield for the period f.e. 01.07.2015 to 30.06.2016 Is as under:

Mlrelal, Performana Score 'OueOf100'

Portfolio Manager Auregate Performinee RankScore {Out of 100 "1

UTIAMC 92.185% 1SBI 91.171% 2ICICISec.POLtd 91.039% 3HSBCAMl . 91.036% 4RelianceCapital AML 90.068% 5

(II) Portfolip Yield (soot:! weight)

April. 20~6 t9 l!Jne. 2016

Portfolio Manager .- Yield% Benchmark Yield RankYield%

RelianceCapital AML 8.39% 8.14% 1SBI 1.39% 8.14% 1HSBCAML 8.38% 8.14% 2UTlAMC 8.37% 8.14% 3ICICISec.POLtd 8.35% 8.14% 4Overall EPFO 8.38%

(III) Cymylatly, vtotsl epmpadl,Ol1Uyly. ZQ15toju~,.ZQll) ,.Portfolio Manaser Vield" Benchmark Yield Rank

Yield"ICICISec.POLtd 8.45% 8.30% 1HSBCAMC 8.45% 8.30% 1SSI 8.44" 8.30% 2UTIAMC 8.44% 8.3096 2RenanceCapital AML 8.41% 8..30% 3Overall EPFO 8.44% •

Ka observali90s 90 the ee[fq[JDJDce;

• All portfolio managers outperformed the benchmark yield by 21-25 bps, largely onaccount of higher allocation to relatively high yielding SOls and PVT bonds vis-a-vis thebenchmark.

- SBI and Reliance AMC generated the highest yield of 8.39% on account of relativelyhigher exposure to high-yielding SOls and PVT bonds.

\... - PortfoliO Managers did not make any allocations to fixed deposits (FOs,.

Th~It~m Is plaeed be/ore the FIACfor perusal and Information.

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••Item No.6 Concurrent Audit Reports of Provident Fund (lDeludblg the fuads) and P,.sion

Fund for the month of May 1016.4

1. External .Concummt Auditor (ECA) MIs Chandhabhoy &; Jassoobhoy. Chartered Accountant bassubmitted the audit report for the month of May 2016.

2. The Action bas been taken on the report of EeA for the month of May 2016.

3. AI per the decision mc in its 128* meetina held on 22.07.2016, SeAhaJ,.QeeA called for givingpresentation. "

PropotaJ: The iteml. placed before FlAC for coDslde•.•• a .ad DecesSary cUreetloDI, If a.y.

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Item No..!.: Status NotelReport on progress of multi ..banking arrangementintegrating Nationalized Banks with EPFO •

•Government of India, MoUtE vide notification GSR No. 360(E) dated

OS.OS.201S has amended the provisions of Para 38(1) and 48 rifEPF Scheme, 1952; to authorize nationalized banks, in addition to SBI, for collection of statutory dues.The notification was in pursuance of the decision in 20S· CBT meeting held on19.12.2014.

2. Para 48 of the Employees' Provident Funds Sc~e, 1952 now provides that theCommissioner shall deposit the contributions received from the employers, el~~lythrough internet banking or any other mode other than internet 'banking (cheques anddrafts). -in the Reserve Bank or the State Bank of India or any other Nationalized Banksor through PayGov platform authorized for collection in the Current Account of the Fund.

3. Consequently, all nationalized.banks werercquested to submit their consentto provide customized services to EPFO for collection at the rate prescribed byRBI for conduct of government business. In response, twenty four nationalizedbanks have expressed their willingness for the same. ;

4. A model agreement has been drafted for conducting the business withnationalized banks other than SBI. Nationalized banks will be authorized primarilyfor direct, online collection of contributions, having bank account with therespective banks and for making payments to beneficiaries from such banks. At thesame time negotiations are being held with State Bank of India to provide itsservices to EPFO at the rates prescribed by the Reserve Bank of India. Theproposed agreement which is to be entered int6 with the nationalized banks isplaced as agenda item No .. +.... in the present FIAC for consideration please.

S. A trial run has been conducted successfully with PNB, Indian Bank, UnionBank of India and Allahabad Bank. The requirements of hardware, software and arobust security system ~ being pu~ in place and it has been decided that thecollection through multi-banking may be rolled out in the month of October, 2016.Thereafter. agreement will be made with other nationalized banks whoever comeforward for banking arrangement with EPFO.

6. It has been an endeavour of EPFO to accredit more and more banks for collectionof dues as part of "Ease of doing business" and to collect such dues through the internet.Similarly, it has been a consistent policy to electronically credit money to beneficiaries inwhich so ever bank that a subscriber may have opened his bank account. Such paymentsare made through RBI's NEFT platform or through the Core Banking Solutions (CBS) ofthe State Bank of India. As more and more banks are associated with EPFO. it shall be

possible to seamlcssJy credit payments to the subscribers using the CBS of me ~ '.banks. Such payments would be more efficient and would improve service delivery to theEPF subscribers. Accordingly, the proposal of engaging private sector banks - ICICIBank, HOFe Bank snd Axft BInk.· as was done by Ministry of.Finance. Government of •India in addition to SBI and nationalized bank, shall be placed before FlAC forconsideration.

•Proposal: The Status Note u aboveis placed before the me for eoaa.Jderatioll.

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Employees' Provident Fund Organisation (EPFO)Concurrent Audit of Investment Portfolios

External Concurrent Auditors' {ECA}presentation to the meeting of FinanceInvestment & Audit Committee {FIAC}scheduled to be held on

.Friday, 19th August, 2016

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Terms of Reference & Coverage ofConcurrent Audit

• Terms of Reference:

Chandabhoy & Jassoobhoy (C&J) has been appointed as External ConcurrentAuditors for verification of investment port/olio managed by 5 Portfolio Managersviz:

(1) HSBCAssets Management (India) Pvt. Ltd.- (2) Reliance Nippon Ufe Assets Management Ltd.

(Formally known as Reliance Capital Assets Management Ltd.)(1) ICICICSecurities Primary Dealership Ltd.(2) State Bank of India (AMC) and(3) UTI AMC Ltd.

CHANDABHOY &JASSOOBHOY 2

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Objective of Audit

• To.provide assurance to the management of EPFOthat:

the fund managers have followed the investment pattern, investmentguidelines and terms of agreement entered between EPFOand the fundmanagers;

Conduct the audit in terms with the Scope of work defined in Requestfor Proposal (RPF)dated 20.06.2011.

CHANDABHOY&JASSOOBHOY 3

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Audit Methodology •..• verification of 'investment portfolio' managed by Portfolio Managers to obtain

reasonable assurance about whether:- .investment patter has been followed;

capital is investment promptly;maximum return possible on the funds.interest and maturity proceeds are collected promptly;proper records are maintainedinvestments are made at optimal market rateinvestments are made at highest available yield for the particular period ofmaturity etc ..

• Also to check and verify:.reconciliation of fund flow and bank account of EPFOmaintained by Port/olio Managers;MISfrom Custodian;daily transactions with market data etc.

• All the audit observations are discussed with respective Port/olio Managers andafter their concurrence, weforward final report to EPFO.

CHANDABHOY&JASSOOBHOY 4

Observations... .

• Our observations are sent to EPFDthrough monthly concurrent audit reports to theFA& CAD, EPFO,Head Office.

• Specific observations:-

fA} Securities were purchased at lowest vield:-During the course of our audit we observed that on few occasions, securities werepurchased at lowest yield for e.g.HSBC(Refer our reports:- September 15,October 15& February 16)UTIAMC (Refer our report:- December 15).

As informed by the port/olio managers, rate fluctuates during the day andinvestment decision need to be taken instantly to deploy the fund so that funds donot remain idle. Further there is no surety whether the price will increase /decrease further during the day. It is purely a market call and depends on bestdecision of portfolio manager at that time.

CHANDABHOY&JASSOOBHOY 5

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Observations •••

(8) Better options for investments were available:-During the course o[our audit we observed that on few occasions, better options ofinvestments are available e.g.Reliance (Refer our report:- October 15).S81(Refer our report:- November 15)

This is mainly applicable to State Government Securities;Securities of different States are available with better yield (with same maturity period);As informed this depends on various factors e.q. volumeof trade, market condition at aparticular trade time. Also depends on fund manager's call/foresight at that time ofinvestment.

CHANDABBOY &JASSOOBHOY 6

Audit Conclusions

• We have sent our final audit reports upto June 2016 to EPFO.Audit /Report of July 2016 is in process and will be sent toEPFOHead D/ficel after receipt of concurrence from all theportfolio managers.

Thank You...7

Amendment 9' ~I~.,se 11 (vii) of Portfolio Management Servlc;e.Agr~ment, pertaining to primary market tran$8ctlons., . .

1. The m~tter Is regarding Portfolio man.gers appol;,teQ by EPFO for Investment of EPFOfunds which can be Invested In the ISS\,leof bonds of their own or its associates.

2. In this regard, the dause 11 (vII) Qf Portfolio management service agreement pertainingto primary ma.~et transactions states:"The Portfolio Manager shall not utilize the services of the sponsor or any of ItsassQClates .Qr lt$ asscxlate brokers, employee$ or their relatives (or the services ofthe .spansor of any other Portfolio Manag,el'$apPQln~ by the EPFO, or any of theira"SSoctate$or Its assocl~te bl'Qkers, employees' or their relatives), for the PurposE! ofany $~l,Irities trensa~Ql1, cjlstributlon, and sale of stCurities In secondary market.How,v,r, InVNtmenta can be made In primary market IQuances In which thefPonf9r qr .ny ql Ita •• sqe/.t.. Qr Itf ••• ocl.t. broke,.. Is one of the LeadM.n.ge", prt)vldetl there I, £$l,'lI'WWf. "wi" tll, o(tI" lil!mu/. pgCgoJlgAfIIlIA4I~tq In,,(estIn th,t ,"""nee and the Poftfollo M.nager (whose sponsor orIIny fit ItIJas,ociates Qr Its as,qc/ate brokers Is one of the LeadManagers) sI!1!I§.?;~tjfJdal~rl12;t tf, lp90t«t~qi~~ af th, '11.fl.e, Ilz,. For the purpose of this sutrseCtion, "assQClate" Includes"a pellon, -(I) who directly or indirectly, by himself, or InCQmblnatlon with relatives, exerQi,es ·~ntrol over the Portfolio Manager or (iI) .InrespeQt Qf whqm the PortfQllo Manager, directly or Indirectly, by Itself, or Inwmblnatlon with 9ther persons ex,rclses a oontrol, or (ill) whose director, officer oremployee Is a whole time ~Irector, qffl<t$ror employee of the Portfolio Manager. PortfolioManag.r will have to s",bmit a detailed list of assoe;lates and sponsor to the EPFO. ThelJamewill bf shareQ by ~heEPFO with the appOinted 'Portfolio Ma(lagers." , •

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~. Th, said prQvlsi9n was examined, and it was felt !hat there could be p08$ible conflict Oflnt,restlf the ,al~' proViSion qontlnu,s to prevail as It'ls. A~ordln,ly, if Is propos.d toal1l,nd the said provision of claus. 11 (vII) •• fQlIQWS to bring an amendment so that.ychPQrtfqllO managers Qannot Invest ePFO flJnds without the prior written approval Ofth, Tevfl. The Pr9PQ88d amendment Is for replacing the highlighted portion Qf theoriginal a~re.ment(copy enclosed at Annexure A):. . "" .•.••Hqw.ver, Inve.tmenta can be made In primary market iQuances In which theapona9r qr any of I/ta .asoc/.tN· or Ita aaoc/atebrokers la one of the Le.dManage,.., R'Vvlcied there Is qa«l'~v., 111JS!'19.' III qUI", ,tlUf!!J., fecJfRllotJW"lstrf t9 Invest In that lauanceand the Portfolio M.nager (whoae espon~or oranYt/f Ita ,.soc/etea or Its aaoclat. bl'QkersIs one of the Lead Manage,..) sJslJ4~Q$~'§frlp,.a.ttJt11.1",- .

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~. In the fQllowing cases, where such investments were made by the Portfolio Managers during201S-1e and 2016-17:

18 Jan 2016

5 Feb 201ts

Total Deal Value In Rs crores4,000

400200170

1,500

NeD ~500

Propq$lll: Th,eagenda Item at Para 3w.r.t. the relevant portion of Clause 1.1. (vII) ofPHS Agreement pertaining to primary market transact/ons Is placedIHIlqre the PlAC lor consideration. '

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lnvestment

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caT, cpr Funds

I(iv) The obligation of confidentian.y on Portfoli. .vlanager sha.. .uso

continue to survive for a period of three (3) years after the date ofte~tion/ expil'y of this Agreement.

11. R.STRICI'IONS & PJ;NAL TY

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(i) 'n1e penormance of the obligations of the Portfolio Manager be$\l~j~t to the restrictions asstatec;l herein and more particularly in~edule2. .'

(U) Th~ Assets~der the management of the Portfolio Manager arerqtricted to the extent of alloc;ation .made to the Portfolio~8er. Fwtl\er, the Tr\lS~~ the pre~ogati~e of making and Iorre\fising the asset. allocation to' the Portfolio Manager during the~0'F$eof this Agreement,

(iii) Th, investment process that ,will be followed by the PortfolioMa.naser while investing the investible fund shall be shared withth~ Trust 'Nithin one moruh from the dctc of the Agreement. Anyexq:ptions to the investment process shall be recorded ill writinga.nd,.\$har~ with th~Trust.The. ~ortfolio Manager $haUnot indulge in any kind of speculativetr~l~~rctiOl'\S.

Inv~tment d~ions 8hQ~d be ~en by thePortfolio Managerwith maxim\lm emphasis on safety 'and optimum returns. ~Portiolio Manager shall charEP' the agreed fe~ from the Tr\1~'~~,.,:'.rendeiing portfolio manag~erlt services without guaranteeing 9'asswing, either 4irect1y··or indirectly, any return. The PortfolioManager shall be responsible for the acts, of omission, or"commissions by its personnel. However, the liability to the Trustshall not exceed the investment with the Portfolio Manager.The .P9r1;fQlio Manager shall .not purchase or sell ~riti.exceecUng 5 pttr cent or more thrQ~gh and one single broker, of theaggregate p~s and sales of $el;."dlles made by ~hePortfolioManager, unt- the Portfo.lio Mana.ger has recorded in writing thej\lftificiltion for exceeding the alores,aid limit and reports all suchinvestments to the SPFO on a quarterly basis.The ~oresaid limits of 5 per cent shall apply for a bleek of threecalendar months on a monthly rolling basis.PQ1'the calc:u1ation of broker limit, all the security transactions inprimary as' well as secondary market arc to be included except\nvest:rnents in bank fixed deposits and Collateralized Borrowingand t..ending Obligations (CBLO).-,

• (iv),(v)

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··, r,, (vi)I

(vjj) The Portfolio Manager shall not utiHse the services of the sponsoror any of its associates or its assoctetc brokers, employees or theirt.tiv~ (or the services of the sponsor of any other Portfolio

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ManagJr appointed by the EPFO, or any of their associates or itsassociate brokers, employees or their relatives), for the purpose ofany securities transu.~tion, distribution, and sale of sccurines insecondary market. However, lnvestments can be made in primary~ket ~ in which the, sPQl\$or or any of itsass0ci4. OJ:its a~te~kers is ~ of the Lead Managers, provided there is,~j)nseNUSwith all other selected, PQrtfolioManngers to inveet inthat ~uance and the Portfolio Manager (whose sponsor or any ofitJIUSQC:ia_or its~. brokers'is one of the Lead Managers)doe. npt mbscri1)e to more than' SO%of the issue size. For thePWPOH of this S\lQ - $«lion, "~ssociate" mcludes a person, - (i)wno di:rectlyor indirect1y~ by himself, or in combination withrelativ~, exercises controi over the Portfolio Manager or (il) inrespect of whom the Portfolio Manager, directly or indirectly, by~tself, .:r in c:ombinatl(':1 with other persons exercises ,\ control, or'(ill) whose director, offic:er Qr employee is a whole time director,officer or employee of the, Portfolio Manager. Portfolio Managerwill have to submit a detailed list of its associates and sp0n$Or tothe BPFQ.· The same will be shared by the L:.PFO with theapPQ~teci Portfolio Managf(!ls.

(viii) At no point·o£ time shall investible.fund exceeding Rs, 1 (one) lakhbe kept idle oeyond two (2) working days. Idle Investible Fundwill mean Investible Fund that are invested in savings bankaccQunts.'i'\f~aforesaiq. period of two l2) working days shall exclude onewotkin~ day for tran;,; er of. Investib:... Fund to the o../c:;ignatedBank AccQ\U\ts and bank holiday •. 1£idle Investible Fund exceedsan axT\Q\lnt of Rs. ,1 (one) lakh for a period of more than twoworking daY', the PorttoliQ Manager shall pay to the Trust penaltyto the extent of sn-:ings bank deposit rate offered by State Bank ofIndia' pl\l14% for such n\Ui\ber of days the Investible Fund wereidl~.The penalty for idle funds Willnot be applicable for ,it\.latiol1$as mentloned in ~\1$e 14 (U), .,For example if the number of working. day~ for which InvestibleFu.nQare idle is 5 and the savings bank deposit rate is 4 per cent,the penalty payable to the Trust would be at the ra~e of 8 per centfOl: a pertod of 3 days.TJ:\e performance evaluation of the Portfolio Manager shall bec$ied out on a monthly, quarterly and annual frequency by theInvestm~t Monitoring ~.In the event ()f breach of any ob~igation statedherein, the Trustwill1intimate the same to ~ Portfolio Manager inwriting. ThePortfoliQ Manager should rectify the same within 30 days of theEFPO communicating it to the Portfolio Manager in writing,

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',Subject: RE: VTMQST PRJORJTY:amendment In clause 11('111)of PMS Dale: 1210811606:08 PMAgreement relating tQ primary market Issuances

-,e TO! im;.epfo@epfindla.gQv.inCc: 'Ref. 1M;' <rc 1.irro@epfindla.gov.In>, rc2.Irn::Oepflndia.gov.ln,

OQ 1.~«Iiepflndia.gov .In, fa.cao@epflndla.gQv.in,'ACQ FA fIQ qCc.f~.~cpepfindla.gqv.In>.c¢cOePflndia.09V.In.'1X'M (M~)'" <dO/T9IT1$.g.bi.co.ln>

From: RAMASESHV <a.ramaseshu@sbl.co.tn> I

foe Amendment In ter~ OfAgreement of R>rtfollOM •. (27k9)

Oear Sir,

With reference tQ your mail dated 11th Aug 2Q16on the captioned subject, we submit 'our response asunder : . • .'

I• •. Some Qf the top arrangers in the corporate,bond market include na""$ Uke SBICapital Markets, ISee PO,Axis Sank e.t.e which are c~vere4 under the' assQciates1sI')Onsorclause for one or the other fundmanaaer. S8l is the promoter of S81Capital Markets, lelel 8ank is the prOlTK)ter of ISec PO anq wevnderstand that an Official of UTI.AMe sits in the.l;>oard of directors of Axis Bank thereby invoking the8ssoct,te/spOnsqr clayse an4 affectfng the respective fund manaser.

We are 9f th~ opinion that the prQPQse4change to the clayse woulc;l make it rather restr1c:Uveto thefund maneser to Qperate effectfvely in the market. In the case of corporate bond bidding, issuers tendto stve-very s~ort notice for bldeJftr\gancJet times abo tend to close the issue within a short span of timeof sybsCripti9n/negotiation. It may Qperationally prove to be Vftry difficult as there may not be enoushtime to seek written approval of the Trust which may lead to mtssing the deal and may not be in thebest interest of the Fund. .

This may also lead to a sitvation 1nwhich one fund manager may not be able to partic;:ipate waitins forthe written permission from Tn.sstwhile others do and,may rojss out on the deal which will have fijrtherrepercussions on the performance evaluation Of the fund manager. '

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. In view of the above and also referring Ot.tl'mail dated 09/Nov/201S & 28/06/2016 (attached he,..with),Wfl request for favourable consideration to contin",e the relaxation of the said dause, till completion ofthe current assignment. The matter of retaxation of the, satd .clause was also discussed tn the

.' ' ". '.performance Review Meetins dated 22/July/2016: '. ~

HqW'''er if E,PFQ",lt1mately ~ec1d_s/wishes to gO ahead with the change tn cla~se as propqsed, we. reqvest IMe ePFQto have I system in place that enslJres a re'sponse is gwen to the fund manager fromthe apPrQ(?rtate &t.tthorlty Of EPFO within th, reasonable ,time that is required to close/confirmparti~ipatton in the elea\. fThank$ " Recards,A.$rinl'las Rema S'fh",Chief P.a!4ar(PM&·CS)sa'..~PFOPh :O~a.•U""430

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Fro~a91.lm~.pftndla.gov.ln (mallto:ac1~m.pftndla.govJnl~.nt: Thvra~aYIP41g\lst11. 2016 12:~ PM.:I~14q.i.f__ ·~~?lq·~·O.1.2.0_15121607

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'fo:ARamaseshu; Y$tin Vlnekar; Jaya Nigam: Puneeit $rivastawa; manish JoshiCo: fa cao: ace Ime; rc2lmq; lmc epfo$1...•,_ .et: VTMOSTPRIORliY: amendh,ent In clavsE) 11(vii) of PMSAgreement relating to primary market lssuences

OeerPMs.

Th, P91'tjQnof clal,lse 11 (vi) of Portfolio management service agreement pertaining to primary market tl1nsactlCmsstates:

" .•.•••••••Howtwr. Investment can ~e made In primlilry market iss4ances In whloh sponsor' or any of Itsassociates or Its associate broke,. II one of the leed Managers, pro\4lded there is CQO.IDllIl wilt! at' ~tbt.rIIII~~Pjg~.m'.lfJ toInvelt In that laauance and the Portfolio manag.r (whose apomJor or any of 1\$ assoqlate$ orIts a"oelate'brok.r Is on. Ofthe Lead Managers) dQ~ ltOuull,tRrJgI$9wart thlD QQ~ 9{t\lluu, ,I •• "

.'The .ald pro'Aslon was 'Mmlntd. an<.tIt W88 felt that there QO~ld·b, PQsllbl' conflict of intereat if the $aId pro\'1olqnQc;mUnv.stq ~r.yal!81 It Is. ~rdlngly, EPFQ Is looklrYgtQ amell.d the sald·prO••slon of clause 11 (\411) ilia follows:

••.•.••••.How.ver. In'4stment ~n ~. made In primary market Issuances In whloh sponsor or any of itsaS$oQiatesor It, associate brok.rs Is on. ofth. Lead Managers. pro~d.d there Is CQq"O,YI .r:oPOQ1111I JJlI.~.Peg~q2 IPAO_QPtlto Inwlt In that Issuance and th, Portfolio manag.r (whos. sponsor or any of its associates or Its

••• QClatebl'Qk.r Is one of~. L.llld Managers)dgg ~S'W~'A$tSP ""lilYI WI1bQ~' IUISlt¥(01ttP~gtw4l12t1l1J'QJ,)."

Plea••, pro\4lde~ur qQmments on thlJ matter latest byTQMORRQW.This may be treated at utmost priority.\ .I

\Regar:<$a.

IMCEPFQ.

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-- DI,clalmer - Th.lnformatlqn In this ~alli. conftd.ntia' and la Intended lol,lyfor addr •••• e. Aqcess to this·mall ~yan~n. el., 18uneuthoria.d. OOp)4ngor further dlstrtbution be~M the original recipient may be unlawful. MY Qplnlone)IPrelSac;tIn ttlls maills that of ,enct,r and does not n.ceSlarlly refl,ot that of State Bank g~ouP.-

Original Measaga RE: M'a.ndm.nt In terml of ~reem.nt of Portfolio Ma'nagementSeMce .Agreemententered with. ,PQl'tfolioManaaers.eml .." .S bj. t,RE: Amenc$ment In terms of Agreement of Portfolio Management SeNoe Agreement enter$d with PQrtfolioU 90. M8nagers

From: -RAMASeSHV" <a.rameseshuOsbl.co.ln>OiIte: Tue, 28 Jun 2016 17:39:28+~To: <Imc.epfoOepftndla.gov.in> • <rc2.lmc@ePft~a,QQV.in>,'''AC IMe- <~1.imc.pfindla.gov.in~

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Oear 511',

With ref~ren~e tQ your mall dated 23/06/2016 on the captioned subject, we submit our comments hereunder

The $cenariQ under amended clause w,s not fully tested during the last quarter of FV2016as we werecon~~mtratinlln primary market deals, UOAVSpecial SOLissuances and bulk deal of NTPC bends directlv withMinistry Of Power. .

We al~Qrefer to our mall "dated 09/Nov/2015(appended hereunder) and recommend for favourableconsideration to continue the relaxation tUi 31/03/2017,

$vbjec\: RE:UTMOST PR;JOR\TY:a~endment In clau •• 11(vl\) of PMS',_ A.greement relating to pr'mary market '•• ",ances

" To: "ac1.it'ro@el)flndla.gov.ln- <ac1.m@epflndla.gov.in>GQ: fa cao <fa.~aQ@ePfIndIa.gov.In>,

OQQ irn!f ~9.fe.imc@.pflndla.gov,ln>,r921mo «c2.lrrcoePfladla.QQv.ln>,1m; epfo <imC·epfoOePflndla.gov.ln>

Date: 1610811602:23 PMFrom VatlnVinekarIFO,(B)-~ FO'M..UJAI <yatln.v~@lsecpd.com>

Dear Sir,

Wf; have perused the amendments proposed by you. Our comments to the same are as under:I .

i. BPFO investment req\Jiremente are growiita year OD year at a robust pace and are, even at thecwrent stage, non-satiable wlb. the limited opportunities in primary markets and limit constraints. Ifthe amen<1mell~ .s proposed, is inplemented on investments in issues arranged by associates,investment opportunities would'be severely 6mitecl (since the associates of portfolio managers aremajor inst~tional arrangers, ranked top S in primary issuances). This could result in difflCulty incleploying funds as per tho investment pattern and thereby impact the performance of the pQrtfoliQ;

, IInvestor response againSt priJnary offers ;., t~e bound as the issuer's offer is valid fQr a limitedperiocl (3standard market pr8cf:ice)._w .••.•.in.ulnr.· DII 2.'.111' 'm ,J iii 11 f"I ••rq".. ••., ••"•••••••••••••.••••••••• "ancI

ill. If a prior written approval is re~d for investing in issues arranged by major institutional arrangerslike Axis a.nk (being an U$OC~te of UTI), ICICI Bank (being associate ofI-See PO) ,and SBI Caps(being an associate ~fS81), it wilt push iss\len to have a primary issuances managed by lesserknown, Don-transparent non-institutionalarrangers.

Oiven the foregoing, lelel Securities Primary Dealership. not.agreeabJe to the ehanges proposed byBPFO videits email ciateo Al,JgQ$t 11.2016.

Repr4fYat¥! ViJlekarI-SeePQ 8PF~

From ,c1.Imc@epf1nd1a.gov.ln [mallto:ac1.lmcOepftndla.gov.ln],sent: 11 AuguSt 201612:03To: A Ramaseshui Vatln Vlnekar IFlXEt>INCOMf,JISEC POIMUMeAI; Jaya Nigam; Puneeit Srivastawa; rnanlsh .lQ$l1Cc: fa cao; ace Imti rc2 lme; lmetepfoSUbject: I,ITMOSTPRIORITY: amendment In dause 11(~1) of PMSAgreement relating to primary market Issuances, , ,

Oe.rPMa,.' '

The pQrtlOn of' clause 11 (vi) of Porttola management $lNlee agreement pertUlng to prtnary market transaction, .

• ates:

t"." ••••••••••Howawr, Inveltmant oan be made In primary market Issuances In whlQh sponsor

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~bjE:lct: Re: lIT'MOST PRJORlTY: amendment In cl81,1se11(vll) of PMSAgreement relating to primary market Issijances

~ T()! fa ceo <fa.cao@epfindia.gov,In>.ace im:: <acc.fa,lr'oo@epfindla.gov.ln>.rc21m; <rc2.iI"ro@epfindia.gov.In>,1m!; epfo <imo.epfo@eptri'ldla.gov.In>, ao1.llro@epfindla.gov.1n

90: "va.n~~habc;.co.in, t"lharpra4hanQhebc.cQ.1n

Date: 12108116 07:04 PMFrom: b.asw In.kumar@hsbc.co.ln

Oear~lr,A, Qt81rad PFA the ,,"pons, w.r.t to the amendment In 018&.1&e1~J\4I) :

KJtJ~~!RC (Q eI«,.,PI'~1.f/W,1t 'AtIlA, \.Ub,g ",teet, rAt.9.1qt«llll'i.~.•, JJIJ«tc

W, had ;Iwn ~baok for ol'I,Ia, 11(\41)w.r.t eecondary market tranaaotlqns with associates I spon$Qr$ofth$p()rtfollomanagers as these are la,,_ anOImportant Instl~utlonalplaY'" In the markets.The ql, •••,e restrlot. va fr9md.a"~ with them In the s~Qn<:lary markete rea~ltlng In IQssofQPPOrt&.lnltyfor I5PFO inV8$tment:i.

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~ t() the sam'l the C&.Irrentchang. sijggested In the amefldment will add to the tum around time taken for atrans,ctl9" while utilizing the ,eNces of the arrang$l'SIn the primary market who are the a$soclatesl spon$OI'$oftho PQrtfoI19 man~gers as primary ma~8t tran•• otlQn8o,n be condl,lcte<1'ata ehart notlce.Thls cou1dl'8$ult In 1o" of9PP9ftvnlty fQr EPFO Irweatments. , '

ePOflsQI'SIassociates of the portfollo managtrS are la~.lnstltutIQnal players. As arrangers of corporate bondissuances they haw a dominant m,rket ,hare of 5O%.Thebal,nce market share of 50% In the primary cotpQratebon~ Issuance market Is shared largely bY Intermedlariee and, few Institutional players.The arrange' list awllable toSPFO for Its primary market Investments will remain cQncentrat$(j to the few actlw non institutional arrangers.

W, Yi9UI~requeatYQUto kindly reoonsld",P. .~estlon8 presentec:tw.r.t olal,lae 11Ni}.~ AAue ;, ,'. ,..

This Is fQryoc.aryour Information.

Reo'~"

Aswin Kumar BalasubramanlanAVP, FlICtd Inoqmel Male AItIt M,nagemlnt (Indl,) Pvt. Ltd.16,V.N.~, FOtt.M'If"~'1·400001, Indl'

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Phone 91 2266145140Emllil R,'J«l~.• IJl.~b$C,Sj9.lnWObato., •• 1m,o,g,m'O$.O$!A;'S9tn"p I

...--:.-..:- .•.-~-.----,-------Our g,r~,te$t glory Is not i,n never f'\Iln~, but in getting up every time we do.

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HS80A •• n.tanaoem.nt (lndll) Prlvat. Llmltl4 1'''O.'.'Ied with thl Slcu,UI••• nd Exchange SO.1d of India •• Portfollq ~.n.".r. Socurltl"InvllItm,ntfInc:ludlng InvlllUnenta In dlttv,llvesare IUbJtct to m•• t " •• and there It no •• raneeor gu.rentl' that the obJ.~IV" of ,theelletit poltfolloavAIi b, achllved. Each .portfolio ' •• xpo•• d to various It •• d.pendlng' UpOl'l the Inv•• ment Objectll(f. Inve.",..nt strat~y and•••• t allocation. Thl POttfollo Man.oer h•• lleeR:!," ,dul ca••• nd diligence In ,.ndanng SIMoes under the Portf9I1QManagement

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Thi&email has b~en blocked from loadlr9 remote images.

$l,Ib~ct: ~ UTMOST PRJORlTY: amendment In clau •• 11(vll) of PMSA9r~tm."t relating to prlm,ry market '•• "ances

To: "ac;1.~QePflru;lla.gov .In" <eo1.lrrccpepflndla.gQv .In>0<;: fa caQ <fa.oaoo.pflndla.gOv.In>,

190 imo ~Q.fa.Imc;Oepflncn •• gQV .In>,rq2 1m; ~q2.~oepflndla.gov.In>,~ .pfo <In'c.epfo@epflndla.gov.ln>

. "l:1ete; 1210811602:35 FMFrom !\In,eIl N Srl\!astavva <Puneeft.$rlva,tavv&Orelaneeaqa.CQn'\jIo

DearS!r.

The current In\l$stm,nt Management ,Aqreement Is compr~h'n$iW In nature and encompasses safegl.l~rds to preventconflict OfInter,$t. pr,sented as ",nder: '

1) Fi",t, \tie condl~on whloh r,qulre1 aUportfoliomanag~nsto Invest in that issuance, and

2) Second,ln\/estm,nt cap o. ~O%on the portfoliomanager whose sponsor or any of its associates or its8$$oclete l',Irokeri,onEJof~e ~tad Managers'.This condition is highly unlikely to be bn~ached$ince th,hlQhtst portfolio allo<:ati<1n~ any portfoliQ manag,r (In thlsc8se S61) is 35%. .

I1

Thank, & RegardsPuneeitN $rlvasta'IMI9987137~17Po\fC)II.o~n,ger - RN\,.AM • SPFO

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···· froM ttcl.lm~~.gQV.ln [mallto:ecl.1mcOepflndla.gQV.ln]~nt: Thursc;tay, Augu$t 11, 201~ 12:03 PMT9; A Ri)~U; yatln Vinekari laye Ngami PuneeitNSrtvastawa; manlshJoshi0:: fa <aQ; ace lmti rc:2 lme; lme epfQ 1

",b)Kt: UTMQST PRlORITY: amendment In clause 11('111)of PMSAgreement relating to primary market IS$~~

The port~n of c1a\lse 11 (vi) of 'Portfolo management service agreement pertaining to prmary market tran*tiQns~,te$:

." ••.••....•Ho~ever.lnvestm.nt can ~. made In primary mar~et Issuances In which sponsor or any of I~'''oelett' QrIts assoQlate tJroke••• Is ~m.Of the L.ad Manag.rs, PrO'fid,d there Is conl'DIYs wil1''',.Qtb.r.n,IJ~S1~lg,mID'A~'l to Invest In that lsauance . ,8nd the' Portfolio manag,r (whOle sponsor or any of its as.oolatos or1\$,nod,. ~l'Qk.r I, on, of the L•• d Managers) d~'I, QJaU)ltlld' 10OlQ[I11105QYa 9Ubtlo,u"I.:

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The sal; pl'Q\4,IQnwal ,,,,.mln.d, and It was felt.that there QOuldb. po'ulble oonftlct of Interest If the $lId pro~.loncontln'yes tQ. pr.~11 _. It Is.Ac<:ordlngty. EPFO Is looking to emend the laid pro'tllalon of clause 11 (\1I).a fQII9WS:

112

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$vb!6ct: Re:UTMOSTPRJORJTY:amen1mtnt In claLlIt 11(vll) of PMS. Agreement relating to primary market Issuances

.•..••To: APFC 1M;<ac 1.Imc@epfindla.gov.ln>ce: ace; In'c <acc.fa.imc@epfindia.gQv.In>,

fa 080 <fa;cao@epfindla.QQv.in>,m epfq <Imc.epfo@eptlndla.gov.In>,rc2lm:<rc2.~ •• pflndla.gov.In>,Amal'ldetp S O'Iopra <Amand •• p.OIopreO..,tI.co.In>,fttalyazur Rehrren <;ahmanOutl.Qo.In>,R,JnJan I( eIIwal <R1anJM.BlawllOutI.cQ.In>,VIv,kMah•• hW .rl <V1v,k.MIh •• hw arlOutLcQ.In>,0Ip KMJIlanty CQiIp.Mohan\yOUU.CQ.In> .

Oate: 1210811604:22 PMFrom: Manish Joshi <Manish.Joshi@uti.co.in>

Oear $Ir,.. I

This has referenCe to the mall on the proposed amendment In clause 11 (~I) of PM~ agreement between portfoliomanage", and eeT EPFO. The probable ramlficatlQns of the prQpos~ amenc:lm,nt are as under.

1. At times Is,uera may 91'4 short ~ce for Issuance. Insvch Instances there may not be sufftclent time tos$8k prlqr written approY411of the trust, thereby missing the whole i"ue.

2. The PfOQ8$$ of 'eeklng prior ,pproval may delay the decision making process resulting in one of the DOrtfoliomana~er, whQs. sponsor or assoolate I. the lead manager, missing the Issue. On both these instances the~ m,},be OppOrtunity loss for.EPF,O.

In$uranQe opmpanles, Netlonal pension scheme an~ prcNdent'1\Inds are those entities whose in\l8stment pattem andthe asset q~ratlon are similar t9 thet of EPFO. These entities compete wtth EPFO in subscribing to issuanc" Inprimary mflf'k,t, whloh Is highly competlth ••••As .per the statute all th"e entitle. have to necessarily In\l8st certainminimum ~rQei1tage In Qebt securities.

The dynamics of the mark.t Is sueh that on few occasions thtt'l,suers may give short notice for 18$\'8ne". At timessuch Issuances are subsCrlQad within short span of opening of ISlue. In such Instanc •• there may not be luftlclenttime te;>s. prior written apprQwt for hi_tmam, resulting In missing few Issuances due to short time IIn. whichmay'b9los8 of opportvnlty for EPFQ.

Cl,lrrtntly ther9 are few Inst.ltutlQn$ whQIare either sPOnsors or assocrates of one of the portfolio menagt'" of EPFO,"" also amQng thf top I.manage,. In primary market. They act as'ead managers In most ofth,iss~nCe8.ProPQS~ em."ct",nt may lad tQ taking extra' time In deciSion making In mqtt ~ tt\e ',sues, which may not 1:)8Inthe ~t Int••.•• t of EPF.Q. : I .

In lJew of the abQ\9 we may continue to adhere to the current. system.;. 14 -Regards

Manlsh JoshiFUnQ Manager· PMSTel: 022•"T~ 90Q4087~

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