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Informist, Tuesday, Jul. 21, 2026

 

NEW DELHI – The Pension Fund Regulatory and Development Authority has invited applications from prospective pension fund managers to manage the corpus under the National Pension System and Unified Pension Scheme, opening the 'on-tap' registration window after a gap of over four years. The regulator had last opened the 'on tap' licensing window in May 2022. "Earlier, registration of Pension Funds was undertaken through applications invited during specified registration windows. Pursuant to the decision of the Authority, the registration process is now being opened on a continuous "on-tap" basis and shall remain open until further notification by the Authority," PFRDA said in a notice last week. 

 

The pension regulator has detailed eligibility criteria that both existing and new pension funds must fulfil to manage the corpus under NPS and UPS. This will be an opportunity for banks to sponsor pension funds and foray into the pension sector.

 

Interested pension fund managers must have experience in fund management – both equity and debt – for at least five years, and must be an entity engaged in financial business activity, which is regulated by the Reserve Bank of India or the Securities and Exchange Board of India or the Insurance Regulatory and Development Authority. According to PFRDA, the interested fund managers must have a positive net worth of at least INR 500 million for the last five preceding financial years and a paid-up capital of at least INR 250 million on the date of application. PFRDA also said that the fund manager must be profitable in at least three of the five preceding years with no cash losses during these five fiscal years. 

 

According to the pension regulator, the monthly average assets under management of the sponsor, individually or jointly, must not be less than INR 500 billion for the last 12 months ending the preceding month of application till the sponsored pension fund meets this criterion on its own. "Assets under management shall not include investment of its own assets, investment advisory services rendered or any other similar activities undertaken by the sponsor(s)," it said.

 

This assumes importance as PFRDA has allowed commercial banks to independently set up pension funds, or sponsor them, to manage the corpus under NPS. Though quite a few pension funds are subsidiaries of insurance or asset management companies, which are themselves subsidiaries of banks, none of the banks currently hold direct stake in any pension fund manager. Bank of Baroda received the regulator's approval to sponsor a pension fund in May.

 

The regulator specified that the criterion regarding the AUM not including investment of its own assets does not apply when a bank is the sponsor of the pension fund, with the bank having a market capitalisation of at least INR 1 trillion, and a total asset base of at least INR 5 trillion. "Further, such Scheduled Commercial Bank shall satisfy the following conditions, based on the published annual report(s) for the most recent financial years, as required to be published under applicable law: (a) the bank has declared profits in each of the immediately preceding three financial years; and (b) the bank has net non-performing assets not exceeding 4% of net advances," PFRDA said. 

 

Beyond the eligibility criteria, interested fund managers must also submit a detailed business management profile, specifying the business plan for the proposed pension operations. They must submit an investment policy document, investment decision-making process flow and portfolio management guidelines. It should include a list of all sources of information and in-house research used in the management of the asset class and a rationale for their selection. They will have to provide a performance track record for all institutional mandates managed by the sponsor company in equities and fixed income asset classes, along with funds managed on a passive basis, such as tracking a specified index. 

 

The application for registration as a fund manager must be paid with a fee of INR 1 million along with applicable taxes and levies. The application will be evaluated in a multistep process, and the pension fund must commence its operations within six months from the date of receiving the certificate of registration. "Any extension in the time limit for such operationalising shall be permitted by the Authority for a maximum period of six months for reasons to be recorded in writing," it said. 

 

Informist had reported in April that PFRDA was soon going to seek applications for pension fund managers via the 'on tap' registration window. Currently, 10 pension fund managers operate under PFRDA – LIC Pension Fund Ltd., SBI Pension Funds Pvt. Ltd., UTI Pension Fund Ltd., HDFC Pension Fund Management Ltd., ICICI Prudential Pension Funds Management Co. Ltd., Kotak Mahindra Pension Fund Ltd., Aditya Birla Sun Life Pension Fund Management Ltd., TATA Pension Fund Management Pvt Ltd., Axis Pension Fund Management Ltd., and DSP Pension Fund Managers Pvt. Ltd. Together, they manage a pension corpus of INR 17.22 trillion.

 

Although the 10 fund managers actively manage the pension corpus, PFRDA has also allowed Motilal Oswal Asset Management Co. and PPFAS Asset Management Pvt. Ltd. to sponsor pension funds. Motilal Oswal AMC received approval in May, and PPFAS Asset Management in April, and are yet to be operational.  End

 

Reported by Priyasmita Dutta

Edited by Avishek Dutta

 

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