Big Reform in NPS: Banks Enter Pension Fund Management
NPS: If you invest in the National Pension System, i.e., NPS, then this news is very important to you. The Pension Fund Regulatory and Development Authority (PFRDA), the largest regulatory body related to pensions, has taken a big decision. Now, scheduled commercial banks have also been given in-principle approval to create their own pension fund for NPS. This will directly benefit crores of NPS subscribers as it will increase competition in the pension sector and give customers more choice.
It is expected that this move will increase distribution and increase competition among fund managers. The Finance Ministry statement said that the proposed framework seeks to remove existing regulatory constraints. So far, the involvement of banks in the pension sector has been very limited. Overall, banks will also be able to create their own pension fund for NPS. However, there are certain rules and conditions to be followed.
The Pension Fund Regulatory and Development Authority, i.e., PFRDA, has clarified that banks have been given in-principle permission to set up pension funds independently. Its objective is to strengthen the pension system and protect the interests of customers. Until now, the role of banks in pension funds was limited due to regulations, but now this is going to change.
PFRDA has also clearly stated that not every bank will be able to create a pension fund. There will be some prerequisites for this. The financial position of the bank should be strong. His net worth should be good, and management should be safe and reliable. So that only strong and reliable banks can handle people’s pension money. It is being said that the Ministry of Finance will notify separately in this matter. These rules will apply to both new and existing pension funds.
