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Pension Fund Regulatory and Development Authority (PFRDA) India Chairman, Hemant Contractor said that Non-resident Indians (NRIs) can invest in National Pension System (NPS) to obtain a social security cover.

PFRDA was communicated by RBI about NRIs being eligible to make such investments. The clarification that effect Foreign Exchange Management Act (FEMA) guidelines to facilitate the investment by NRI’s in NPS will be out shortly.

Contractor said that, "There was some ambiguity about whether to add NPS as eligible investment by NRI. So, we took up the matter with RBI and recently they have given this clarification that NPS like insurance and mutual fund could also be eligible investment for NRIs."

Importance of NPS scheme for NRIs

According to Contractor, NRIs living in the Middle-East does not have mandatory social security benefit. Through this window, Non-resident Indians can save money for their old age besides enjoying the tax break as prescribed.

Talks between the Pension Fund Regulatory and Development Authority (PFRDA) and  bankers like SBI, HDFC Bank, Canara Bank, Indian Bank and several other south India-based banks are going on, to tap potential of NRIs.

"We have started talking to bankers about attracting NRIs to enroll for NPS scheme. We see NRIs as very attractive market for NPS. We would like to push for NPS for the NRIs," Contractor said.

The move could increase the subscriber base in addition to the expansion of the pension corpus in the private sector. Currently, corpus under the National Pension System is Rs 91,000 crore.

-Sumana