The Hindu Business Line : LIC, SBI in fray for pension fund manager slots

`We will not have any cap on the number of players. We will set down stringent criteria for entering the sector and whoever fits the bill will be considered.'

Mr D. Swarup

New Delhi , July 24

THE insurance goliath, Life Insurance Corporation of India, and the country's largest bank, State Bank of India, could be the first public sector entities handling pension contributions in the proposed New Pension System (NPS).

The two financial players have expressed their interest to the interim Pension Fund Regulatory and Development Authority (PFRDA) in leading the public sector's charge in the post-reforms pension market.

"LIC and SBI have shown interest in setting up their own pension fund managers (PFMs)," the Chairman, Interim PFRDA, Mr D. Swarup, told Business Line.

Mr Swarup said that the UTI Mutual Fund, the largest mutual fund in the country, was not in the race to fill up the first few PFM slots that would be on offer. UTI was at one point being talked about as the most suitable public sector candidate to handle pension contributions.

It appears that UTI MF might not have been able to make any formal proposal for a PFM outfit since its own future is uncertain with the Government having initiated moves to hand the fund over to one of its present four sponsors or a combination of them. UTI MF's four sponsors are LIC, SBI, Punjab National Bank and Bank of Baroda.

Mr Swarup said that the PFRDA would not be placing any cap on the number of PFMs to be granted licences. "We will not have any cap on the number of players. We will set down stringent criteria for entering the sector and whoever fits the bill would be considered. We would also allow more than one PSU PFM," he said.

Allowing more than one public sector PFM would not only provide a wider choice to pension subscribers, but could also help placate the Left parties that have voiced their fears on contributions being handled by private parties.

During the initial phase of working out the structure for the NPS, the Government had proposed to limit the total number of players in the pension market to a maximum of six PFMs, with only one of them being a public sector entity. The thinking was on lines of the recommendations of the OASIS report prepared by Dave Committee.

Mr Swarup said that the market dynamics would result in the capping of the number of players during the initial stages.

He said that in the first few years, the pension market might not be big enough to make it profitable for a large number of players to be in action.

In the long-run, however, there would be ample scope for more players to enter the fray with the pension sector billed to become the largest segment in the financial sector.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
LIC, SBI in fray for pension fund manager slots

Banks can allow cos to hedge commodity price risks

ING Vysya biz at Rs 4,600 cr in AP

Commercial banks in AP urged to step up lending to SHGs

Trade unions aim for closer ties in financial sector

`RBI must be the sole regulator for co-op banks'