In a significant move aimed at expanding the reach of the National Pension System (NPS) across rural India, the Pension Fund Regulatory and Development Authority (PFRDA) is actively working to onboard Regional Rural Banks (RRBs) as Points of Presence (PoPs). 

This strategic initiative, spearheaded by PFRDA Chairman Deepak Mohanty, seeks to emulate the successful distribution model of the Atal Pension Yojana (APY) through RRBs.

“We are very keen that RRBs start offering NPS. RRBs had played a crucial and successful role in APY. We now want them to do the same in NPS also”, Deepak Mohanty, PFRDA Chairman told businessline here.

“PFRDA is now directly speaking to RRBs and the sponsor banks. It takes time. From Policy perspective, we have enabled this”.

Already the PFRDA efforts are showing some results with ten out of the 14 RRBs sponsored by State Bank of India (SBI), the nation’s largest commercial bank, now having expressed their interest in registering as PoPs with PFRDA, sources said.

This surge in RRBs seeking to offer NPS is poised to significantly enhance the accessibility of the pension system in rural areas.

PFRDA is actively engaging in discussions with both RRBs and their sponsor banks to facilitate the seamless integration of these rural banks into the NPS framework. 

The collaboration between PFRDA and RRBs through their sponsor banks marks a pivotal step in the drive to bolster financial security for rural populations across India, furthering the vision of inclusive and comprehensive pension coverage, experts said.

This effort aligns with the broader goal of promoting pension coverage among rural communities, ensuring that individuals with varying income levels in rural areas can avail themselves of the benefits of the NPS.

Regional Rural Banks, established under the RRB Act, 1976, were designed to provide financial services, including credit, to small farmers, agricultural laborers, and artisans in rural areas. Presently, the Central government holds a 50 percent stake in RRBs, with 35 percent ownership resting with the sponsoring banks, and the remaining 15 percent under the purview of state governments.

REGULATION REVAMP 

Mohanty said that PFRDA is “on course” to complete its exercise of revamping its existing regulations as part of its aim to further ease of doing business and bring down compliance costs leading to increased returns for subscribers. 

“We have already received stakeholder comments. We are hopeful of completing it during the current fiscal. We had already set up internal as well as external committee which is looking into this”, Mohanty said.

The PFRDA move to review and overhaul its Pension Fund regulations comes in the wake of Finance Minister Nirmala Sitharaman’s announcement in her budget speech this year that financial sector regulators would be requested to undertake comprehensive review of Regulations to simplify, ease and reduce cost of compliance. 

PFRDA has now proposed changes that would lead to simplification of governance norms of Pension Funds (PFs) in line with Companies Act 2013 based on enhanced disclosures for PFs. 

PFRDA proposes to stipulate Directors’ Responsibility Statement and CEO and CFO certification to be part of scheme financial statements. 

CEOs and CFOs have to take responsibilities that Scheme financial statements have been prepared and presented to provide a true and correct view of Scheme state of affairs and scheme NAV; there is adequacy and effectiveness of internal financial processes and digital architecture controls; compliance with PFRDA Act, PFRDA (pension fund) Regulations, investment guidelines, valuation guidelines,stewardship code, voting policy and other applicable laws and Adherence to Code of Conduct and Ethics.

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