Money & Banking

PFRDA to finalise names of new central record-keeping agencies by mid-Sept

KR Srivats New Delhi | Updated on August 04, 2020 Published on August 04, 2020

Supratim Bandyopadhyay

Pension regulator PFRDA hopes to finalise, by mid-September, the names of new Central Record Keeping Agency (CRAs) that will be allowed to operate in the pension market, its Chairman Supratim Bandyopadhyay has said.

A CRA — which is the fulcrum of the NPS architecture — carries out the functions of record keeping, administration and customer service for all subscribers under the National Pension System (NPS). A CRA has linkages with the Points of Presence (PoPs), customers and pension fund managers.

“We have received applications for the Request for Proposal (RFP) that we had floated for new CRAs. We want to expand the number of players who could function as CRAs and deepen the market. The market will become more vibrant, bring down the prices and give advantage to the subscribers. We should be able to finalise and give approvals by mid-September,” Bandyopadhyay told BusinessLine.

There are currently two CRAs — NSDL and Karvy. NSDL, whose term is over, will have to again get licence from the regulator and would have to come through the new RFP process, Bandyopadhyay said.

On the other hand, Karvy —whose term is yet to be over — will continue to remain a CRA under the old RFP.

Bandyopadhyay pointed out that the CRA business is quite capital intensive and entry barrier is very high. PFRDA is understood to have received 3-4 applications from aspiring CRAs under the recent RFP.

Meanwhile, PFRDA had recently amended its regulations requiring all CRAs to, at the application stage itself, disclose information on any action or legal proceedings initiated against them, their directors or principal officers in the past, including the pending proceedings, for any material breach or non-compliance with any laws, rules and regulations or directions of any regulatory body.

Pension fund managers

Bandyopadhyay also said that PFRDA was working closely with the Department of Financial Services (DFS) in the Finance Ministry on the draft FDI rules in the pension sector.

 

“Once the final FDI rules for pension sector is issued (by DFS), we will come out with a RFP for onboarding new PFMs. Rules for FDI is important and that is why we could not earlier go ahead with the RFP. We don’t want confusion at later point in time,” he said.

Currently, the entire NPS monies are handled by seven pension fund managers, including few in the private sector. PFRDA is keen to bring in more players with better remuneration structures.

Covid-19 impact

Bandyopadhyay said the Covid-19 induced lockdown has not impacted the new NPS sign-ins from the private sector, which grew a healthy 25 per cent in July.

The PFRDA chief said he expects things to be even better from September.

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Published on August 04, 2020
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