New Delhi, July 29: The Centre has set the reforms ball rolling by appointing three private asset management firms, including Anil Ambani’s Reliance Capital, to handle the huge corpus of the employees’ provident fund in a bid to offer better returns to subscribers.

The Centre’s move, ignoring objections from the Left, prompted a communist-backed union to allege that Reliance Capital was being rewarded for the support of the Samajwadi Party, whose leadership is close to Anil Ambani, for the government.

But the government dismissed the charge, saying that the private company was chosen on the strength of its bid. “There is no political connection to be seen in the inclusion and they (Reliance Capital) were always there on the bidding list,” labour secretary Sudha Pillai said.

So far, the State Bank of India (SBI) had the monopoly over managing the provident fund corpus, totalling Rs 2.5 lakh crore, derived from the salaries of around four crore workers. The fund paid an interest rate of 8.5 per cent last year.

From September, besides the SBI, Reliance Capital, HSBC and ICICI Prudential will manage the funds for a fee.

The four were shortlisted from 10 bids — the lower the fee quoted, the higher the chance of bagging the rights. But companies that made “zero-fee” bids were disqualified.

“The UPA government has started implementing the reforms agenda and the first victim is the workers’ fund. The Samajwadi Party’s bailout of the UPA government seems to have resulted in Reliance gaining entry,” D.L. Sachdeva, a member of the provident fund’s central board of trustees and a leader of the CPI-backed Aituc, said.

Sachdeva said Reliance Capital was not among the first three shortlisted during the technical evaluation.

However, in the financial evaluation, both the SBI and Reliance Capital quoted 0.01 per cent as fee, tying for the third place.

Sources said that during the meeting of the trustees, Union labour minister Oscar Fernandes asked if four, instead of three, firms could be appointed. The proposal was passed by a majority of the members, the sources said. The board overruled an opinion by the law ministry that asset management companies could not handle the provident fund corpus.

The Bengal government’s representative did not take part in today’s meeting.

Fernandes later said: “Reliance was bracketed at No. 3. They are the biggest investors after the SBI, and they both bid the same amount.”

The companies can invest the funds in government securities and bonds issued by state governments and public sector units but not in the stock market.