India allows banks to sponsor pension funds under NPS

Core Viewpoint - The Pension Fund Regulatory and Development Authority (PFRDA) has granted in-principle approval for banks to independently establish pension funds to manage the National Pension System (NPS), aiming to enhance competition in the sector [1][7]. Group 1: Regulatory Changes - The PFRDA oversees assets exceeding $177 billion and has set eligibility norms for banks to establish pension funds, which must align with the Reserve Bank of India's guidelines [1][7]. - Banks must meet specific criteria related to net worth, market capitalization, and prudential soundness to qualify for setting up pension funds [1][7]. Group 2: Current Landscape - Currently, banks act as points of presence for the NPS, managing subscriber registrations, contributions, and other system services, with 10 registered pension funds under the PFRDA [2][7]. - Some existing pension funds have affiliations with financial institutions, including banks [2][7]. Group 3: Broader Reforms - The approval for banks to sponsor pension funds is part of broader reforms by the PFRDA, which previously allowed NPS subscribers to invest in gold and silver exchange-traded funds, the Nifty 50 index, and Alternative Investment Funds [5][7]. - The PFRDA has also revised the Investment Management Fee structure for pension funds, effective from April 1, 2026 [6][7]. Group 4: Governance Changes - Three new trustees have been appointed to the NPS Trust Board, including Dinesh Kumar Khara, a former chairman of the State Bank of India [7].