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India’s pension fund regulator has allowed banks to sponsor pension funds that will manage monies under the National Pension System (NPS), in a bid to bolster competition in the sector.
The Pension Fund Regulatory and Development Authority (PFRDA), which oversees assets worth more than $177 billion, said in a statement on Wednesday (December 31, 2025) that it had given in-principle approval for banks to independently set up pension funds to manage the NPS, subject to eligibility norms aligned with the Reserve Bank of India’s (RBI) guidelines.
Banks will have to meet eligibility criteria linked to networth, market capitalisation, and prudential soundness, it added.
Currently, banks serve as points of presence, handling subscriber registrations, contributions, and other system services. Some existing pension funds have ties to financial institutions, including banks.
The evolution of pension reforms in India
At present, there are 10 registered pension funds with the PFRDA.
The change is part of broader reforms by the regulator. In December last year, the PFRDA allowed NPS subscribers to invest in gold and silver exchange-traded funds, the Nifty 50 index, and Alternative Investment Funds.
The regulator also revised the Investment Management Fee structure for pension funds starting April 1, 2026, according to the latest release.
Additionally, three new trustees have been appointed to the NPS Trust Board, including Dinesh Kumar Khara, a former chairman of the country’s largest lender, State Bank of India.
Published – January 01, 2026 10:00 pm IST
