Scheduled commercial banks can set up pension funds to manage NPS: PFRDA paves the way
PFRDA, or the Pension Fund Regulatory and Development Authority, has paved the way for significant reforms which could boost pension infrastructure and expand the reach of the National Pension System (NPS) in the country. It has allowed commercial banks to set up pension funds to manage NPS and has named three new trustees to the NPS Trust Board.
Kolkata: Scheduled Commercial Banks can set up their own pension funds for managing NPS, Pension Fund Regulatory and Development Authority has said. In a set of reforms that has wide implications PFRDA has paved the way for improved governance standards and stronger protections for subscribers. "PFRDA's board has approved, in principle, a framework to permit Scheduled Commercial Banks (SCBs) to independently set up Pension Funds to manage NPS, with the objective of strengthening the pension ecosystem. This shall enhance competition and safeguard subscriber's interests. The proposed framework seeks to address existing regulatory constraints that had limited bank participation till now," the government said in a statement.
The framework that PFRDA approved on the first day of 2026 establishes clear eligibility standards which are linked to the net worth, market capitalisation, and prudential soundness which are in sync with the norms set by the banking regulator RBI.
Details of criteria will be announced
PFRDA has said that the detailed criteria will be notified separately and those will apply to both new and existing Pension Funds. The pension regulator is of the opinion that the new framework will help in promoting competition and safeguarding interests of subscriber. "The proposed framework seeks to address existing regulatory constraints that had limited bank participation till now. By introducing a clearly defined eligibility criteria based on net worth, market capitalisation and prudential soundness in line with RBI norms, it will ensure that only well-capitalised and systemically robust banks are permitted to sponsor Pension Funds," said the official statement.
Three new trustees
The pension regulator has appointed three new Trustees on the Board of NPS Trust. They are Dinesh Kumar Khara, former chairman, State Bank of India; Swati Anil Kulkarni, former executive vice president, UTI AMC and Arvind Gupta, co-founder and head, Digital India Foundation and member of the National Venture Capital Investment Committee under the Fund of Funds Scheme managed by SIDBI. Dinesh Kumar Khara has also been designated as the chairperson of the NPS Trust Board.
PFRDA also restructured the Investment Management Fee for Pension Funds. These changes will come into effect from the first day of FY27.