Start ups, venture capital funds, alternate investment funds and a host of infrastructure financiers will now be able to tap into funds with the National Pension System.
The Pension Fund Regulatory and Development Authority has notified fresh investment guidelines for the NPS for private citizens that allow investments in a number of new products. “The changes in investment guidelines are based on the suggestions of the GN Bajpai panel. We have also tried to harmonise the investment basket for the private sector NPS with that of the government employees,” said a senior official with the PFRDA. While the overall exposure to asset classes of equity, government securities and corporate bonds has not been changed, the new rules allow pension fund managers to choose from a host of products to invest in.
The NPS for the unorganised sector has assets under management of Rs 684.23 crore while the corporate sector NPS has a corpus of Rs 6,860 crore as on August 31, 2015. According to the guidelines only fresh accretions can be invested in the new products.
In a major boost to start up firms, the guidelines allow for investments in alternate investment funds. Further, investments in listed and to be listed bonds have also been permitted that is expected help start-ups to float bonds and get funds from the NPS.
“Listed or proposed to be listed (in case of fresh issue) debt securities issued by bodies corporate including banks and public financial institutions, which have a minimum residual maturity period of three years from the date of investment,” said the guidelines.
The new norms also allow investments in infrastructure debt funds of both non-banking finance companies and mutual funds. In the category of corporate bonds, investments have also been permitted in Basel III tier-I bonds by scheduled commercial banks, rupee bonds, affordable housing bonds and listed or to be listed bonds by infrastructure companies as well as the Indian Railways.
Up to five per cent of the portfolio can also be investment in miscellaneous investments such as commercial mortgage-based securities and residential mortgage-based securities and units of real estate and infrastructure investment trusts.