Regulator allows banks to sponsor NPS pension funds; PFRDA clears framework in principle

New Delhi: Banks will soon be able to independently sponsor pension funds to manage National Pension System (NPS) assets, after the Pension Fund Regulatory and Development Authority (PFRDA) on Thursday approved, in principle, a framework aimed at removing regulatory constraints that have so far restricted banks’ participation in pension fund management.

In a statement, the regulator said the PFRDA board has cleared a framework to permit banks to set up and sponsor pension funds for managing NPS assets, with the objective of strengthening the overall pension ecosystem. The move is expected to enhance competition and safeguard subscriber interests.

Banks seeking to sponsor pension funds will be required to meet “clearly defined” eligibility criteria based on parameters such as net worth, market capitalisation and prudential soundness, aligned with norms prescribed by the Reserve Bank of India.


According to PFRDA, this will ensure that only well-capitalised and systemically robust banks are permitted to enter the pension fund management space. Detailed guidelines will be notified separately and will apply to both new and existing pension funds.

At present, banks act only as points of presence (PoPs) in the NPS ecosystem, handling subscriber registrations, contribution collections and other system-related services. Currently, there are 10 pension funds registered with the PFRDA.

Separately, the regulator also announced the appointment of three new trustees to the board of the NPS Trust following a formal selection process. Former State Bank of India chairman Dinesh Kumar Khara has been appointed as a trustee and designated chairperson of the NPS Trust Board.

The other two trustees are Swati Anil Kulkarni, executive vice-president at UTI Asset Management Company, and Dr Arvind Gupta, co-founder and head of the Digital India Foundation.

In addition, PFRDA has revised the Investment Management Fee (IMF) structure for pension funds, effective April 1, 2026, introducing differentiated rates for government and non-government sector subscribers. The IMF for government sector employees under the Composite Scheme, Auto Choice and Active Choice G-100 options will remain unchanged.

For non-government sector subscribers, the IMF will range from 0.12% for assets under management (AUM) up to Rs 25,000 crore, tapering to 0.04% for AUM exceeding Rs 1.5 trillion, the regulator said.