Pension fund market needs diversification: DFS Secretary M Nagaraju

"Ninety per cent of assets are concentrated in only three pension fund managers - SBI, LIC, and UTI," M Nagaraju said

The pension fund industry requires greater participation, given the high concentration of assets, according to M Nagaraju, secretary of the Department of Financial Services. Speaking at Indian Banks' Association's (IBA's) 20th Annual Banking Technology Conference, Expo and Citations, he emphasised that the vision of Viksit Bharat involves active engagement from all agencies.

 

“Ninety per cent of assets are concentrated in only three pension fund managers — SBI, LIC, and UTI. This means the pension industry needs more engagement and aspiration from other fund managers to diversify the industry in the country. The vision of Viksit Bharat calls for active participation from all agencies,” he stated.

 

He further added that financial institutions require an additional aggregator to safeguard them against fraud, similar to the role played by the National Payments Corporation of India (NPCI) in the banking sector.

 

The NPCI provides a comprehensive monitoring solution that enables banks to generate alerts and decline fraudulent transactions by leveraging artificial intelligence (AI) and machine learning (ML)-based models, he explained.

 

According to the Reserve Bank of India’s (RBI's) annual report, in FY24, bank frauds increased by 166 per cent to 36,075 cases compared to the previous year.

 

In December, the RBI introduced a beneficiary account name lookup facility for the Real-Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) systems to minimise errors and fraud risks.

 

Previously, systems like the Unified Payments Interface (UPI) and Immediate Payments Service (IMPS) allowed remitters to verify the beneficiary's name before initiating a transfer.

 

“Banks are required to establish more skill development centres to handle and provide technical training, set up work facilities across the country, impart financial education, and provide initial credit. Instruments and functional coverage need to substantially improve to provide a safety net to all citizens,” Nagaraju said.