The securities and exchange board of India has directed the National Securities Depository Ltd to start a central record-keeping agency (CRA) under the new pension scheme for government employees.
The move will allow pension regulator, the Pension fund Regulating and Development Authority, to start funds management by public sector fund managers under the new pension scheme. The new contribution schemes apply to government employees joining after January 2004. Contribution collected from the government and employees under these is around Rs 2,000 crore.
The PFRDA has selected four public sector financial institutions — the Life Insurance Corporation of India, State Bank of India, UTI AMC and IDBI Capital — to be pension fund managers (PFMs). In its board meeting on Wednesday, the SEBI board said the NSDL needed to set up a strategic business unit to start the CRA, which has to be hived off within three years without any financial and legal implication on the exiting beneficial owner of NSDL.
Till then, the NSDL needs to ensure the financial integrity of the company.
The market watchdog also stated that NSDL should ensure setting up CRA, which should not result in erosion of its net worth required to carry out depository activities. Besides, it needs to take insurance cover for the risk, if any, arising out of other activity.