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Govt favours 100% FDI in pension
November 08, 2004 15:27 IST
The government favours 100 per cent foreign direct investment in the pension sector, which will have a "limited" number of fund managers, a top finance ministry official said on Monday. The government is also likely to put in place a 'central record-keeping and accounting agency', which would be the nerve centre of the new 'defined contribtion' pension scheme, in the next 4-5 months.
About half a dozen entities, including National Securities Depository Ltd, Central Depository Services, UTI-Investor Services Ltd, Stock Holding Corporation of India and the US-based Principal group, are keen on becoming the CRA.
"We will pitch for 100 per cent FDI," joint secretary (capital markets and pension) U K Sinha said on the sidelines of a seminar on pensions, organised by India Invest Economic Foundation in New Delhi.
Indications are that the issue might be taken up at the Cabinet in the near future as the Finance Ministry is ready with a Bill, which seeks to set up Pension Fund Regulatory Development Authority.
Explaining the rationale behind pension reforms, Sinha said the Centre's pension liabilites rose to Rs 23,158 crore (Rs 231.58 billion) in 2003-04, amounting to 13 per cent of the total tax-revenue.
Asked about the minimum capital requirements and number of pension fund managers, he said it would be decided by the PFRDA.
At present, there is an interim pension regulator and the government proposes to introduce a Bill in Parliament in this regard, possibly by the winter session.
Though the new system did not assure guaranteed returns to investors, in order to safeguard investors, there would be "severe" actions against those pension fund managers who indulge in "deliberate misdemeanours," he said.