The Pension Fund Regulatory and Development Authority of India has further streamlined the regulations for the eligibility criteria of fund managers of the National Pension Scheme, bringing in clarity on the net worth and the minimum capital requirement.

According to the original Pension Fund Regulatory and Development Authority (Pension Fund) Regulations 2015, clause 8(1)(c), sponsors, either individually or jointly, need to have a positive tangible net worth of at least Rs 25 crore on the last day of each of the preceding five financial years.

This clause was amended in February 2020 whereby the sponsors, either individually or jointly, were required to have a positive tangible net worth of at least Rs 50 crore on the last day of each of the preceding five financial years, out of which at least Rs 25 crore should be the capital. But the amendment was not clear about the nature of the capital.

This was subsequently clarified through a notification published on Tuesday whereby of the minimum positive tangible net worth of Rs 50 crore, the regulations now state that at least Rs 25 crore should be the paid-up equity capital on the date of making the application as a sponsor.

“Initially, the sponsor was only required to comply with the net worth criteria of at least Rs 50 crore which, in accordance with the amendment mandated that Rs 25 crore out of such Rs 50 crore of net worth should constitute the capital of such sponsor.

“The criteria has been further amended to provide that the capital requirement of Rs 25 crore should be the paid-up equity capital and not any other form of capital on the date of making application as sponsor,” said Suresh Surana, founder, RSM India.

“It is to be noted that the notification dated May 25, 2021, provides for the aforementioned clause to substitute sub-clause (d) which provides for profit criteria and not sub-clause (c) which actually deals with the net worth and capital requirement. On an apparent basis, this may appear to be a clerical error to many people and a corrigendum providing clarification may be expected from the government,” he added.

More players

At present, there are seven pension fund managers for NPS and industry sources said that at least two more private players are evaluating the eligibility criteria of the PFRDA. “Today, we have over 40 mutual funds and 27 private sector general insurance companies. There is a need for more participation in NPS. But the regulator has to ensure only serious players come into the industry,” said an industry source.

As on April 30, 2021, the assets under management in NPS is Rs 5,73,717.16 crore, covering a base of 1,45,04,489 subscribers.