Needed, more domestic institutional investors
Reports say that foreign pension funds will soon be entering in droves into India’s capital market, disguised as FIIs.
By ET Bureau |
Reports say that foreign pension funds will soon be entering in droves into India���s capital market, disguised as FIIs.
The move comes even as pension funds in India largely remain uninvested with most of these funds lying in public account.
The move comes even as pension funds in India largely remain uninvested with most of these funds lying in public account.
This is an irony. The new pension scheme (NPS) ���based on the principle of defined contribution and the possibility of high rewards subject to reasonable risks, as opposed to guaranteed return��� is already operational for a section of the central government employees as well as employees of most state governments (in fact, all states barring the Left-ruled West Bengal, Kerala and Tripura).
The pension regulator, PFRDA, has already put in place the necessary administrative systems for the impeccable running of NPS, even as the relevant Bill (PFRDA Bill) is pending in Parliament. Now that the government has won the trust vote in Parliament, it is incumbent on it to push this Bill and pave way for investing pension funds, the magnitude of which will grow manifold in the years to come, in more lucrative instruments.
Flow of pension funds into the market would also add to the market depth. Strengthening the prowess of domestic institutional investors like pension funds by giving them access to the capital market is one way to address the apprehensions over the ���hot money��� status that some analysts accord FIIs.
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