Published on February 19, 2014
EquiCorp Associates Advocates & Solicitors National Pension System- Aggregator Registration www.equicorplegal.com
National Pension System National Pension System (“NPS”), an initiative of the sector regulator i.e., Pension Fund Regulatory and Development Authority (“PFRDA”). NPS is an easily accessible, low cost, tax-efficient, flexible and portable retirement savings account. Under the NPS, the individual contributes to his retirement account and also his employer can co-contribute for the social security/welfare of the individual. NPS is designed on a defined contribution basis wherein the subscriber contributes to his account, there is no defined benefit that would be available at the time of exit from the system and the accumulated wealth depends on the contributions made and the income generated from investment of such wealth.
NPS Lite NPS Lite is a model of NPS which is low-cost, feature optimized model, aimed at economically disadvantaged sections of the society. The NPS Lite model has been developed by PFRDA to provide a uniform platform for old age income security to all sections of society and facilitate economically weaker sections of the society to join the NPS platform. NPS Lite is intended to reach its target population through specific entities identified by PFRDA, termed as Aggregators, explained in further detail below.
Aggregators Aggregators are entities identified by PFRDA for making NPS available to their constituent subscriber base and maintain them into NPS Lite system. Thus, Aggregators shall be the main interface between the NPS Lite subscriber and NPS architecture. The Regulations for Aggregators under NPS Lite-2010 (hereinafter referred to as “Regulation”) is the regulatory framework that governs the NPS Lite model and the functioning of Aggregators.
Eligibility Criteria to be an Aggregator Entity to be registered (under act of central or state government) and/or adequately regulated by any of the financial sector regulator(s); Registered entity must be must have been registered under any of the following:i. Societies Registration Act 1860 ( or a State amendment of this Act) ii. Indian Trusts Act, 1862 iii. Charitable and Religious Trusts Act, 1920 iv. Indian Companies Act, 1956 ( section 25, for non profit companies) v. Indian Companies Act 1956 with necessary certification from RBI (for NBFCs) vi. Indian Companies Act 1956, for any other company
Eligibility Criteria contd. Entity must have been in business of financial services or commodity development for last three (3) years with proven track record and be financially viable; Entity must satisfy the following net worth criteria:i. INR 1 Crore for being in business for last 3 – 5 years; ii. INR 50 lakhs for being in business for more than 5 years; iii. the net worth criteria can be relaxed completely/partly at the discretion of PFRDA for entities having exceptional track record and more than 10 years of experience;
Aggregators- Role & Responsibilities Promotion of NPS and awareness about the need for old age income security among its constituent group members; Meeting the ‘Know Your Customer’ requirements in respect of potential NPS subscribers as mandated under AML/CFT requirements. KYC requirements in case of NPS Lite subscribers shall be governed by provisions of RBI Master Circular no RBI/2008-09/72 dated July 01, 2008 and as amended from time to time till separate orders on this aspect are issued by PFRDA; Discharge of responsibilities relating to fund and data upload within prescribed time limits; Collection of contributions from subscribers and ensuring its passage to Trustee Bank. Ensuring availability of services including distribution of Annual Statement of Transactions and showing online statements to its underlying subscribers as mandated under NPS-Lite; Handling grievances received from subscribers and their resolution
Aggregator Registration The NPS Lite model has a three tier architecture as per which each Aggregator has to register one of its offices as oversight office (“NLOO”) in NPS Lite to monitor and control the operations being performed by its underlying offices. Aggregator is also expected to designate office(s) as collection centers (“NL-CC”) for performing the functions of collection and processing of contributions of underlying subscribers. The broad roles of designated offices of the Aggregator and the sequence of registration of these offices are as under: a. Registration of NL-OO - NL-OO is expected to undertake monitoring & controlling functioning of its underlying offices (NL-AOs i.e., uploading office and NL-CCs) towards discharging services as per the service standards defined by PFRDA. NL-OO is required to fill up the registration form (N1 form) and submit the same to Central Recordkeeping Agency (“CRA”). The NL-OO is required to self-authorize the form before submission of the same to CRA (NSDL, Mumbai);
Aggregator Registration contd. b. Registration of NL-AO - Upon successful registration of the NL-OO, registration of NLAO shall commence. The NL-AO is expected to undertake contribution upload on CRA Lite system and fund transfer to Trustee Bank for its underlying subscribers. NL-AO is required to fill up the registration form (N2 form) and submit the same to NL-OO for authorization. Upon authorization, NL-OO shall send the form to CRA for registration. c. Registration of NL-CC – NL-CCs or collection centers are expected to interface with subscribers and perform key functions relating to collection of registration forms, undertaking KYC, contribution collection and passing the contribution information and funds to NL-AO for further processing. Registration of NL-CCs will be undertaken upon completion of registration of NL-AO in NPS Lite. The NL-CCs registration form (N3 form) shall be authorized and forwarded by the respecting NL-AOs to which they are linked.
Consult the Experts Complete assistance for making the necessary filings, applications etc. for obtaining PFRDA approval. Informal discussion with contact personnel within PFRDA so as to perfect the application before the same is submitted. Follow up support at various points in time during and after the pendency of the application so as to ensure that any additional documents/records requested by the PFRDA is submitted in a systematic and timely manner. Updating Company on a regular basis as to the status of the pending application.
About Us Equi Corp Associates (ECA) is a mission driven, start-up law practice based in New Delhi, India and founded in 2012 for providing affordable access to legal counsel benefitting start-ups, small and growing businesses, social business enterprises, impact investors and non-profit organizations. Our boutique service offerings are primarily at the intersection of start-up, sustainable development, social enterprise and investment sectors, designed to help clients wade through laws that were not originally designed with them in mind. The basic idea behind starting ECA was to be a part of India’s growth by reaching out to novel start-ups and established businesses, and helps them adapt best global practices/technologies in local conditions and in advising them about legal aspects involved in modern markets in order to keep our clients in pace with the dynamic competitive environment. ECA is instrumental in advising various social enterprises and start ups in setting up their business in India. ECA not only having some of the best legal minds, but the best business minds too: lawyers are intimately familiar with the business environment, and know the emerging risks and opportunities of their industries and practice groups.
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