PFRDA asks CRA not to outsource core business activities

NEW DELHI: Pension fund regulator PFRDA has asked Central Record Keeping Agency (CRA) under the National Pension System not to outsource core activities such as receipt of forms and handling grievances. PFRDA has asked Central Record Keeping Agency (CRA) under the National Pension System not to outsource core activities such as receipt of forms and handling grievances.

CRA is responsible for recordkeeping, administration and customer service functions for all NPS subscribers including receiving instructions from subscribers, transmitting such instructions to pension funds and effecting switching instructions received from subscribers.

The Pension Fund Regulatory and Development Authority said it has been "observed" that often CRA resorts to outsourcing to reduce costs, and at times, for strategic reasons.

"However, there is no outsourcing policy prescribed for the CRA as on date," it said, while issuing principles of outsourcing for the CRA.

The CRA desirous of outsourcing their activities should not however, "outsource their core business activities and compliance functions", the rules said.

The regulator has also come out with an indicative list of core and non-core activities of CRA.

Information Technology support infrastructure/activities for running the activities of CRA should not be outsourced to the extent possible, it said.

"Wherever, they are outsourced the same shall form part of the outsourcing policy approved by the Board of the CRA," PRFDA said.

It also asked that CRA should ensure that risk impact analysis is undertaken before outsourcing any activity and appropriate risk policy and mitigation measures.

"An effective monitoring of the entities selected for outsourcing shall be done to ensure that there is check on the activities of outsourced entity," the PFRDA said.

NSDL e-Governance Infrastructure Limited has been appointed as CRA for NPS with effect from December 2007.

The regulator has also invited bids for appointment as a second CRA by the PFRDA in addition to the existing CRA under the NPS.