PFRDA seeks views on introducing SLB in NPS

Pension fund regulator PFRDA proposes to allow short lending of securities under the Securities Lending and Borrowing (SLB) mechanism regulated by SEBI to optimise the returns to NPS subscribers.
SLB is a scheme that enables settlement of securities sold short. It enables lending of idle securities by the investors through the clearing corporation/clearing house of stock exchanges to earn a return through the same. Securities in the F&O segment are eligible for short selling.
All market participants including retail (except Qualified Foreign Investors) in the Indian securities market have been permitted to lend/borrow securities but only through an Authorized Intermediary (AI).

Pension Fund Regulatory and Development Authority (PFRDA) has floated a concept paper in this regard had invited comments from stakeholders
The paper said SLB provides an incremental return on an idle portfolio.
"So if an investor intend to hold it for long term, in the shorter term I could lend this whenever there is a demand and get additional return in terms of lending fees/additional return knowing that NSCCL/BOISL are the guarantors," it said.

Insurance companies, Banks, HNI, Mutual funds and Retail investors are currently participate in SLB as lenders.
It further said that since the horizon of investments made under various schemes of National Pension System (NPS) are majorly long term, securities remains idle with the custodian which can be further utilised to gain additional returns for NPS subscribers by lending securities.

An expert committee headed by G N Bajpai was set up in September 2014 to review the investment guidelines for the private sector for NPS. The Committee had interalia recommended introduction of new asset classes and instruments as one of the measures to optimise the returns to the subscriber.