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Informist, Thursday, May 21, 2026

 

--Source: Canara Bank in talks with PFRDA to set up pension fund business

 

By Sagar Sen and Priyasmita Dutta

 

NEW DELHI – State-owned Canara Bank is in talks with the Pension Fund Regulatory and Development Authority to foray into the sector by setting up a pension fund, a senior official with the regulator said Wednesday. "We are seeing good interest among banks in setting up pension fund operations. Our discussions with Canara Bank are in an advanced stage," the official told Informist. 

 

"A final decision on this will likely be taken soon," the official added. If Canara Bank secures an approval, it will be the second public sector bank to get the regulator's nod after Bank of Baroda, following the enabling provision issued by the PFRDA in January. 

 

In January, the PFRDA allowed scheduled commercial banks to independently set up pension funds to manage pension corpus under the National Pension System. 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 holds a direct stake in any pension fund manager. Bank of Baroda received the regulator's approval to sponsor a pension fund earlier this month. 

 

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 16.5 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. While Motilal Oswal AMC received approval in May, PPFAS Asset Management received it in April. However, these companies will take at least another six months to be operational, according to the official. 

 

"The journey from getting approval to becoming operational is a long one... they will take a minimum of six months. They will have to arrange for the capital needed to set up the business," the official said. "Bank of Baroda will also need at least six months before it launches a pension fund," the official said. 

 

The PFRDA mandates that companies sponsoring pension fund managers have a net worth of at least INR 500 million over the preceding five financial years and a paid-up capital of at least INR 250 million. The sponsor must also have at least 5 years' experience managing funds. The company backing the pension fund should be engaged in financial activities and be regulated by the Reserve Bank of India, the Securities and Exchange Board of India, or the Insurance Regulatory and Development Authority of India. It must also have an average of INR 500 billion in assets under management.  

 

Canara Bank reported a net profit of INR 45.06 billion for the March quarter, down nearly 10% on year. On Wednesday, the bank's shares ended at INR 127.66 on the National Stock Exchange, up 1.2% from the previous close. End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Saji George Titus

 

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