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Pension regulator PFRDA has issued a Draft Risk Management Framework for the Central Record keeping Agencies (CRAs) under NPS architecture.
The Risk Management Framework for CRAs is a description of Authority’s expectations with respect to risk management governance, the organisation’s risk appetite and key elements of its risk management process.
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The stakeholders including CRAs have been given time till January 1 to provide their feedback/suggestions/inputs on the draft proposals.
The risk management framework provides guidance on the approach to managing risk in the NPS ecosystem so that the various risks associated with the functioning of CRAs do not result in any deficiencies in service to customers, disruption, or any issues effecting the integrity of record keeping, accounting, administration functions of the CRAs.
Currently, there are three CRAs registered with the Pension Fund Regulatory and Development Authority. They are Computer Age Management Services Ltd (CAMS), Protean eGov Technologies Ltd. (Formerly NSDL e-Governance Infrastructure Limited), and KFin Technologies Limited.
The CRAs play an important and pivotal role in the entire NPS architecture as the entire information movement and storage among the various participants in the NPS architecture is routed through them and any disruption in services or any issues concerning the integrity of the system, puts the entire NPS architecture at risk.
PFRDA has said that it has broadly laid down the framework in the draft and can be suitably developed and followed by the CRAs.
The Risk Management Framework will have to be approved by the respective Boards of CRAs and submitted to the regulatory. The policy would be reviewed periodically by the Board of PFRDA.
The objective of the Risk Management Framework includes managing risk in a consistent manner across the organisational set up of the CRA; have a strong risk culture wherein managing risk would be part of regular work of the CRA; and deliver fair outcomes for subscribers, maintain an orderly and transparent operation of services of the CRAs to subscribers and all other stakeholders.
Broadly the risks faced by CRAs can be categorised as operational risk, fraud risk and legal risk. The proposed risk management framework would encompass all registered CRAs, their employees, agents to all risks that the CRA systems and their administration is/may be exposed to.
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