PPFAS, Bank of Baroda Seek PFRDA Approval to Manage NPS Pension Funds

As per Bloomberg, Parag Parikh Financial Advisory Services Ltd (PPFAS) and Bank of Baroda are set to enter India’s National Pension System (NPS) by applying for licence to manage pension funds.  

With retirement assets growing, the Pension Fund Regulatory and Development Authority (PFRDA) is expected to open its application window soon. 

PPFAS and BoB Plan Entry into Pension Fund Space 

PPFAS Mutual Fund, led by CEO Neil Parag Parikh, has received board clearance to apply for a pension investment licence. The firm is currently preparing to submit its application to the PFRDA.  

Bank of Baroda, along with an undisclosed third entity, is also in discussions with the pension regulatory body to seek a similar licence, according to sources familiar with the matter. These engagements come amidst regulatory changes enabling greater customisation in NPS portfolios. 

Details of India’s Pension Fund Market 

India’s retirement savings industry under NPS is valued at approximately $175 billion. Currently, 10 pension fund managers operate under this system, including established players like SBI Pension Funds, ICICI Prudential Pension Fund Management, and HDFC Pension Fund Management.  

Investments are categorised under 4 major asset classes: equities, corporate bonds, government bonds, and alternative investment funds, including REITs and InVITs. 

Read More: Angel One Nifty Total Market ETF: HDFC Bank Leads Portfolio With 7.26% Weight! 

Regulatory Reforms Open Doors for New Players 

In September, PFRDA permitted pension fund managers to offer customised investment options, improving flexibility for NPS subscribers. This reform has attracted interest from multiple financial institutions.  

The regulator has received expressions of interest from at least 2 large banks, suggesting a shift towards increased competition and participant diversity in the pension space. 

Current Pension Fund Managers  

The existing NPS managers control investments across asset categories, ensuring balanced risk exposure. New entrants like PPFAS and BoB aim to broaden service offerings and investor choices within this framework.  

Conclusion 

The planned entry of PPFAS and Bank of Baroda into pension fund management under PFRDA signifies growing interest from financial institutions in India’s retirement savings space. This reflects evolving regulatory landscape and market expansion opportunities. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.