NEW YORK, January 2, 2026, 05:26 ET
- India’s pension regulator cleared scheduled banks to sponsor and set up pension funds under the National Pension System
- A revised, slab-based investment management fee structure takes effect from April 1, 2026
- PFRDA appointed three new trustees to the NPS Trust board, naming ex-SBI chief Dinesh Khara as chair
India’s pension regulator has cleared scheduled commercial banks to sponsor and independently set up pension funds under the National Pension System, in a move aimed at boosting competition in the retirement savings market. The Pension Fund Regulatory and Development Authority (PFRDA) said the approval is “in principle” and subject to eligibility norms. https://www.pib.gov.in/PressReleasePage.as…
The decision matters now because it opens a new line of business for banks beyond distributing pension accounts to directly managing retirement money, raising the prospect of sharper competition for fund mandates. It also puts banks in the same arena as existing pension fund managers that have dominated NPS asset management.
The shift comes alongside a fee overhaul and governance changes that the regulator is pitching as part of a broader push to strengthen the pension ecosystem and expand coverage across corporate, retail and gig-economy workers. The revamped fee framework is scheduled to kick in at the start of the next financial year.
Under the proposed framework, PFRDA said banks will need to meet criteria linked to net worth, market capitalisation and prudential soundness, aligned with Reserve Bank of India norms. The detailed criteria will be notified separately and will apply to both new and existing pension funds, it said.
Banks already act as “points of presence” for the NPS — service providers that handle subscriber registration, contributions and other back-office services — but do not typically run pension fund management companies. The PFRDA oversees more than $177 billion of NPS assets and there are 10 registered pension funds, Reuters reported. https://www.reuters.com/world/india/india-…
Pension funds under the NPS are currently sponsored by life insurance and mutual fund companies, and 10 pension fund companies manage NPS assets worth 15.95 trillion rupees for 21 million subscribers as of Nov. 30, 2025, the Telegraph reported. It said the investment management fee is currently charged on slabs and ranges from 0.03% to 0.09%.
As part of the reforms, PFRDA revised the Investment Management Fee (IMF) — the annual charge pension fund managers collect for managing assets under management — with effect from April 1, 2026. For non-government sector subscribers, the IMF will be tiered from 0.12% for AUM up to 25,000 crore rupees down to 0.04% for AUM above 150,000 crore rupees, the finance ministry release said.
The revised slab-based IMF introduces different rates for government and non-government subscribers and will also apply to schemes under the Multiple Scheme Framework, with that corpus counted separately. The IMF for government sector employees under specified options remains unchanged, the release said.
The annual regulatory fee payable by pension funds to the PFRDA will stay at 0.015% of AUM. Out of that, 0.0025% of AUM will be passed on to the Association of NPS Intermediaries to support awareness, outreach and financial literacy initiatives under the regulator’s guidance, it said.
PFRDA also appointed three new trustees to the board of the NPS Trust, naming former State Bank of India chairman Dinesh Kumar Khara as chairperson. The other trustees are former UTI AMC executive Swati Anil Kulkarni and Digital India Foundation co-founder Arvind Gupta, according to the finance ministry release.
“Allowing banks to sponsor pension funds can expand NPS access across corporate, MSME and gig segments,” said Rahul Singh, an associate professor at O P Jindal Global University. MSMEs are micro, small and medium enterprises. https://www.business-standard.com/finance/…
The bank entry is the latest in a series of changes around the NPS, a government-backed defined-contribution retirement scheme in which subscribers build a corpus invested in markets. The regulator has also moved to widen investment choices, including allowing exposure to gold and silver exchange-traded funds — funds that trade on an exchange like a stock — and alternative investment funds, which typically include private equity-style vehicles.
