Banks are reluctant to sell NPS products, says PFRDA
Banks in India are not interested in distributing products of New Pension System (NPS), as currently only about 15% of the bank’s branches are offering pension schemes believes Yogesh Agarwal, chairman, Pension Fund Regulatory and Development Authority.india Updated: Apr 24, 2011 23:03 IST
Banks in India are not interested in distributing products of New Pension System (NPS), as currently only about 15% of the bank’s branches are offering pension schemes believes Yogesh Agarwal, chairman, Pension Fund Regulatory and Development Authority (PFRDA).
“There are around 50,000 bank branches in the country, but only 8,000 branches are selling products of NPS,” Agarwal said, at a function to launch NPS products by Union Bank of India.
According to him one of the main reasons behind the reluctance is that banks are preferring distribution of products of insurance companies and mutual funds.
“This (bank’s reluctance for NPS schemes) is despite the fact that NPS schemes have consistently offered better returns than schemes of insurance companies," Agarwal added. NPS products have offered around 12-14% returns to its customers, he said.
Regulated by PFRDA, the NPS is voluntary saving scheme that aims to provide for a steady income with market-based returns over the long term. NPS presently has 20 lakh subscribers and has a corpus of around Rs 9,000 crore.
According to the chairman, NPS products are a good business proposition for the banks apart from being a social
PFRDA is awaiting the report of the Bajpai committee, which was instituted to make recommendations to popularise NPS. “The committee is expected to submit the report by the end of this month,” said Agarwal.
The Bajpai Committee, headed by former Sebi chief BN Bajpai, was appointed to look into the problem stifling the growth of NPS and find ways to popularise it with individuals. It was set up in August 2010.