NEW DELHI: After seeing a good response from investors with regards to the National Pension Scheme (NPS), the central government is planning to launch another guaranteed return product by the end of this fiscal year.
“The regulator will formulate a product this financial year and give it to the board. May be in the next six months you may see that a product is ready, but launch my take time,” PFRDA chief Supratim Bandyopadhyay said.
While discussions were already on over the formulation of the scheme, the Covid-19 pandemic had derailed the process. However, now that the economy is showing signs of recovery, work on the product will resume.
Bandyopadhyay also added that the regulator will be forming a committee very shortly on the matter. “We will formulate a product this financial year and give it to the board. May be in the next six months you may see that a product is ready but launch my take time,” he added.
Generally guaranteed products have a different charge and fee structure, a reason why they are not entertained by the either stock market Securities and Exchanges Board of India (SEBI) or the insurance companies, since they feel it is not a viable product in the long run.
“It is part of our Act (to offer guaranteed product), we have to do it. The moment you give a guaranteed product, the capital adequacy requirement for the fund managers goes up. Currently, what we are doing (is) that the product is absolutely marked-to-market basis. So, we are not taking any investment risk on ourselves,” the PFRDA chief explained, however.
As on October 10, 2020, the total number of subscribers under the NPS and APY schemes has crossed 3.76 crore, and the assets under management metric (AUM) has grown to Rs 5,05,424 crore, he added. “We believe, we will be very close to Rs 6 lakh crore AUM (by year-end). But nobody can tell about the market forces...But it will be very close to Rs 6 lakh crore, if not Rs 6 lakh crore, “ he observed.