selective. We are looking at 15-20 PFMs over the years. If we find some very good PFMs, we may allow them to manage NPS.
Now that the Pension Bill is passed in Parliament, do you see major FDI inflows?
The FDI limit in pension is linked to that in insurance. I am happy with 26% FDI cap. We will be happier with 49%. But the sectoral cap is a non-issue for pension as the minimum capital requirement is just R25 crore. Like mutual funds, the capital requirement is less in pension. Increasing FDI to 49% will provide for only R5.75 crore additional FDI in each PFM. FDI is important for insurance sector as it is a capital guzzler. FDI is needed in pension for attracting technology and expertise.
But don’t you expect foreign pension funds to forge joint ventures with Indian firms for pension foray?
Some of the foreign companies have already tied up with Indian firms and formed pension fund management companies—Reliance Capital has a joint venture with Nippon and DSP has tied with Blackrock. Both of them have got licences.
How do you intend to tackle the competition that NPS faces with similar products of insurance, mutual funds and even EPFO?
NPS is the only genuine pension product in the country. Others are masquerading as pension products but are not pure pension products. They are pretenders. They were being sold because NPS was not available a few years ago. NPS has the least cost and the best returns. Soon, those pension products of insurers will see a decline in their business now that NPS has picked up.
There has been comparison between PFRDA-regulated NPS and EPFO’s schemes over benefits and charges. How do you justify that NPS is better?
The track record speaks for that. The NPS offers far superior returns than EPFO schemes. Even the finance minister has said that new subscribers of Employees Pension Scheme (EPS) should be shifted to NPS. There is an element of subsidy in EPS but not in the case of NPS. World over, everybody is going for market returns. Even the EPF is offering market returns as the interest