Pension Fund Regulatory and Development Authority (Point of Presence) Regulations, 2015

EXTRAORDINARY PART III—Section 4 PUBLISHED BY AUTHORITY No. 74] NEW DELHI, WEDNESDAY, MARCH 4, 2015/PHALGUNA 13, 1936 PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY NOTIFICATION New Delhi, the 4th March, 2015 PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY (POINT OF PRESENCE) REGULATIONS, 2015 No. PFRDA/12/RGL/139/3.—In exercise of the powers conferred by sub-section (1) read with clauses (e), (l), (n), (o) and (p) of sub-section (2) of Section 52 of the Pension Fund Regulatory and Development Authority Act, 2013 (23 of 2013), the Pension Fund Regulatory and Development Authority hereby makes the following regulations, namely:— CHAPTER I PRELIMINARY 1. Short title and commencement—(1) These regulations may be called the Pension Fund Regulatory and Development Authority (Point of Presence) Regulations, 2015. The regulation aims at encouraging an independent, strong and effective distribution channel for National Pension System and ensuring that market practices of the points of presence are fair, efficient and transparent for the promotion and protection of interest of the subscribers. (2) They shall come into force on the date of their publication in the Official Gazette. 2. Definitions—(1) In these regulations, unless the context otherwise requires— (a) “Act” means the Pension Fund Regulatory and Development Authority Act, 2013 (23 of 2013); (b) “auditor” means a person who is qualified to audit the accounts of a company undersection 224 of the Companies Act, 1956 (1 of 1956); (c) “Citizen of India” means any person qualifying to be a citizen of India under the Citizenship Act, 1955 (57 of (d) “Company” means any company formed and registered under the Companies Act, 1956 (1 of 1956); (e) “ompliance officer” means a person of responsibility from the point of presence; designated as such and charged with the responsibility of monitoring compliance by the point of presence of the provisions of the Act or the rules or the regulations made or notifications, guidelines, circulars or instructions issued by the Authority thereunder; (f) “I-Pin” means an identification number used to authenticate the subscriber to login website of the central recordkeeping agency or the National Pension System Contribution Accounting Network through internet. (g) “T-Pin” means an identification number used to authenticate the subscriber in the Interactive Voice Response system. (h) “Point of Presence- corporate” means an entity which is registered by the Authority to act as a point of presence in respect of its employees and directors only. (i) “Point of Presence- sub-entity” means an entity which has been assigned any of the functions or obligations of a point of presence specified under these regulations, by a registered point of presence and which has been accepted by the Authority. (2) Words and expressions used and not defined in these regulations but defined in the Act, shall have the meanings assigned to them in the Act. CHAPTER II REGISTRATION OF POINTS OF PRESENCE 3. Application for grant of certificate of registration—(1) Any applicant meeting the eligibility criteria specified in this regulation, may apply for grant of a certificate of registration as a point of presence, in such application form as may be specified by the Authority and supplied by it to the applicant. Applicant shall submit a non- refundable fee of Rupees Ten thousand towards for application and administrative fee for processing of the application along with the application form in the manner specified in the application form. The Authority shall acknowledge receipt of the application form within seven days of receipt of such application from the applicant. (2) The applicant shall pay an initial registration fee of Rupees twenty-five thousand within fifteen days from the date of receipt of intimation from the Authority about acceptance of its application for grant of certificate of registration as point of presence. (3) An application, not complete in all respects and not conforming to the instructions as specified in the application form and these regulations shall be rejected: Provided that, before rejecting any such application, the applicant shall be given a reasonable opportunity to withdraw or to complete the application in all respects and rectify the errors, if any, within such time as the Authority may specify. (4) The Authority may seek additional information from the applicant for processing the application: Provided that the Authority shall record the reasons in writing about the relevance of such additional information in processing of the application. (5) Any point of presence, which was granted a permission to function as such by the Interim Pension Fund Regulatory and Development Authority immediately prior to establishment of the Authority under the Act and such permission continues to be valid as on or after the date of notification of these regulations may continue to act as such for a period of ninety days from the notification of these regulations or, if it makes an application for grant of registration within ninety days of notification of these regulations till the disposal of its application by the Authority. 4. Fit and proper person-criteria or eligibility—(1) The following shall be the eligibility criteria for any applicant intending to obtain a certificate of registration as a point of presence and the date, on which the application has been received for the first time by the Authority, shall be construed as the date for satisfying the following eligibility conditions by the applicant, namely:- (a) registered and regulated by any financial regulator including the Reserve Bank of India, the Securities and Exchange Board of India, the Insurance Regulatory and Development Authority, the Pension Fund Regulatory and Development Authority and the National Housing Bank; (b) having a minimum of fifteen branches in India with each branch having the necessary Information Technology infrastructure and capacity to electronically link to the central recordkeeping agency approved by the Authority. Each of these branches of the point of presence should have demonstrated capability to electronically transmit the subscriber’s contribution and information not later than “T+1” basis where T stands for the day on which clear funds are available with the Point of Presence; (c) minimum net worth (paid-up capital plus free reserves) of rupees two crores which shall include a minimum paid up capital of rupees fifty lakhs as on the last day of the immediately preceding financial year; (d) shall possess a three year track record of profitability (Profit after tax) out of the last five financial years as on the last day of the immediately preceding financial year and not having any cash losses in the last two financial years; (e) shall be in the business of marketing or selling of retail financial services or products; (f) absence of convictions and restraint orders by any financial sector regulator or by a court of law in any of the preceding five years for any offence involving moral turpitude, economic offences, violation of any securities or banking law or fraud; (g) conforming to any other criteria as may be specified by the Authority from time to time in the form of resolutions, notifications, circulars, guidelines, having regard to the interest of the subscribers and for orderly growth of the pension industry: provided that,- (i) a Central or State Public Sector Undertaking ; or (ii) a Public sector undertaking registered under any of the Central or State Acts; or (iii) any other entity, organization or company not falling either under (i) or (ii) mentioned above with a minimum employee strength of three hundred as on the date of making application to the Authority and which is desirous of offering National Pension System account to its employees may either join the National Pension System through a point of presence or may opt to be registered as a point of presence– corporate by applying to the Authority in the application form so specified along with a registration fee of Rupees ten thousand only. The Authority may having regard to the interest of the employees exempt the applicant at the time of making an application as point of presence- corporate, from fulfilling any or all of the eligibility criteria as mentioned in this regulation. Those employers desirous of offering National Pension System to their employees and who do not fall under any of the above shall join the National Pension System through the medium of Point of Presence only. This dispensation shall be provided to the applicant to offer National Pension System account in respect of his employees and directors only and not to others. 5. Disclosure of information—(1) The Authority having regard to the interest of the subscribers, may make disclosure to the public of the information on such application made by the applicant by placing such information on a website as specified by the Authority including a website maintained by the applicant: Provided that the other relevant information furnished by the applicant and which relates to commercial confidence and private information of the applicant, which it may state as confidential, may not be disclosed by the Authority, subject to the provisions of any law or rules or regulations or any order or decision pronounced by a court of law or tribunal, as the case may be, mandating such disclosure. (2) Any material change in the information furnished or placed on a website under these regulations shall be intimated to the Authority by the applicant promptly but not later than fifteen days of the occurrence of such change. 6. Furnishing of information and clarification—(1) Subject to sub-regulation (4) of regulation 3, the Authority may require an applicant to furnish any further information or clarification for the purpose of disposal of the application, and, thereafter, in regard to any other matter as may be deemed necessary by the Authority. The applicant or its principal officer shall, if so required, appear before the Authority for a personal representation in connection with an application. (2) The applicant shall furnish such information and clarification to the satisfaction of the Authority, within the time specified in this regard by the Authority. 7. Verification of information—(1) While considering the application, the information furnished by the applicant and its eligibility, the Authority may, if it so desires, verify the information by physical verification of documents, office space, and inspect the availability of office space, infrastructure, and technological support which the applicant is required to have. (2) For the purpose of verification of information, the Authority may appoint any person including any of its officers or an external auditor or agency. 8. Consideration of application—(1) For considering the eligibility of the applicant and grant of certificate to such applicant, the Authority shall take into account all such matters which it deems relevant to the pension sector and the National Pension System, including but not limited to the following :- (a) whether the applicant or any of its associates have in the past been refused certificate of registration by any of the regulators including, Reserve Bank of India, the Securities and Exchange Board of India, the Insurance Regulatory and Development Authority, Pension Fund Regulatory and Development Authority and National Housing Bank and if so, the ground for such refusal; (b) whether the applicant have in the past five years been imposed with penalties by any of the regulators referred to in clause (a) or by a court of law or tribunal, on the matters concerning violation of regulations, directions, guidelines and circulars of the regulators and if so, the ground for such refusal or have been convicted for any offence involving moral turpitude, economic offence, violation of any securities or banking law or fraud; (c) whether the applicant satisfies the eligibility criteria and other requirements specified in these regulations; (d) whether the grant of a certificate to the applicant is in the interest of the subscribers or the objective of orderly development of pension sector or of the National Pension System. (2) The Authority may invite the applicant to make a presentation to the Authority at a date, time and locations determined by the Authority. The purpose of such presentations would be to allow the applicants to present their proposal to the Authority and the key strengths in their proposals. (3) Any application for grant of certificate of registration,- (a) which is not complete in all respects and does not conform to the requirements and the relevant requirements specified in these regulations; or (b) which does not contain such additional information as required by the Authority; or (c) which is incorrect, false or misleading in nature; or (d) where the applicant is not in compliance with the eligibility requirements as set out under these regulations or the relevant regulations; or (e) which in the opinion of the Authority is not in the interest of subscribers and or the objective of orderly development of pension sector and the National Pension System; or (f) where the applicant is not a ‘fit and proper person’ or not complying with the requirements as provided in these regulations; shall be rejected by the Authority for reasons to be recorded in writing by the Authority. (4) Before rejecting an application, the applicant shall be given an opportunity in writing to make good such deficiencies which can be removed, within the time specified by the Authority, for the purpose: Provided that where an application is rejected for the reason that it contains false or misleading information, no such opportunity may be given and the applicant shall not make any application for grant of certificate of registration under these regulations or any other regulations for a period of one year from the date of such rejection. (5) An application for grant of certificate of registration, under regulation 3, which is complete in all respects, shall be disposed of by the Authority, normally within a period of sixty days from the date of receipt of such request. 9. Procedure for grant of certificate of registration—(1) The Authority on being satisfied that the applicant is eligible, shall grant a certificate of registration in the form specified in Schedule-I and send intimation to the applicant in this regard: Provided that where any pending proceeding is before the Authority or any court or tribunal which may result in the suspension or cancellation of the certificate of registration, the Authority may grant a conditional registration. (2) The successful applicant who has been given the certificate required to submit a security deposit equivalent to one percent of its net worth or rupees five lakh, whichever is higher. The maximum security deposit shall not exceed rupees twenty lakhs. The stipulated deposit has to be deposited with any scheduled commercial bank which will not be released to the applicant unless the prior permission of the Authority is obtained or a Bank guarantee to the same extent is furnished. Such deposit certificate duly marking the lien of the Authority shall be retained by the point of presence after producing the same to Authority for verification. (3) Every point of presence shall furnish to the Authority, as and when called upon to do so, a statement certified by the Bank in which such fixed deposit is kept. (4) If the Authority is prima facie of the opinion that any point of presence or point of presence sub-entity working under the point of presence and registered with Authority has violated the terms and conditions of registration or has contravened any provisions of the Act, rules or regulations, the Authority may pass orders for attachment of the security deposit, pending the inquiry or investigation against such point of presence. (5) Upon the request of the point of presence to waive this requirement of security deposit, the Authority may consider waiving the requirement of the security deposit for reasons to be recorded in writing, having regard to the interest of the subscribers. (6) Within thirty working days of the date of receipt of certificate of registration, the point of presence shall enter into separate agreement with the National Pension System Trust and the central recordkeeping agency for operationalisation of National Pension System, besides any other intermediary, as may be directed by the Authority. 10. Conditions of certificate of registration—Any certificate of registration granted by the Authority to point of presence shall be subject to the following conditions, namely:— (a) where the point of presence proposes to change its status or constitution, it shall obtain prior approval of the Authority for continuing to act as a point of presence after such change in its status or constitution; (b) it pays the applicable fees and levies in accordance with the relevant regulations; (c) it abides by the provisions of the Act, regulations, directions, guidelines and circulars as may be issued by the Authority from time to time; (d) it meets the eligibility criteria and other requirements specified in these regulations throughout the tenure of such certificate of registration so granted: Provided that the Authority may impose such other and further conditions as it may deem fit in the interest of subscribers and or for the orderly development of the National Pension System or the pension sector. 11. Effect of refusal to grant certificate of registration—(1) Where an existing point of presence has been refused grant of certificate of registration under these regulations, or has surrendered its certificate of registration, or has been directed by the Authority to cease to act as a point of presence due to non-payment of renewal fee as required by the regulations or has been directed to be wound up by an order of a court, such point of presence shall,- (a) forthwith cease to act as such point of presence; (b) transfer its activities to another point of presence which has been granted a certificate of registration for carrying on such activity and allow the subscribers to move to another point of presence as directed by the Authority and inform all the underlying subscribers of such a change in Point of Presence along with the reasons; (c) make provisions as regards liability incurred or assumed by the point of presence, if any; (d) take such other action, within the time limit and in the manner, as may be required under the applicable regulations or as may be directed by the Authority. (2) While refusing grant of certificate of registration under these regulations to a point of presence, the Authority may impose such conditions upon the point of presence as it deems fit for protection of the interest of subscribers of the point of presence and such conditions shall be complied with. 12. Period of validity of certificate of registration—(1) Subject to compliance with the provisions of the Act, rules and regulations, the certificate of registration granted to a point of presence shall remain valid unless suspended or cancelled by the Authority. (2) where a certificate of registration has been granted subject to conditions, the validity of such registration shall be construed as subject to such conditions. (3) a point of presence may, within ninety days before the expiry of five years from the date of registration or from the date of payment of renewal fee last accepted by the Authority, make an application in the specified form to the Authority for acceptance of the renewal fee. Provided that if the application along with renewal fee reaches the Authority, not later than one year from the date due for payment of renewal fee, an additional fee of rupees one thousand per month for such period of delay shall be payable by the applicant to the Authority: (4) the renewal fees shall be a sum calculated at the rate of one-half percent of the charges earned out of National Pension System business in the preceding financial year subject to minimum of rupees twenty five thousand and maximum of rupees one lakh as renewal fee. 13. Exemptions in certain cases from eligibility criteria—(1) If any applicant including entities or institutions which propose to do only online subscriber registration, account operation and servicing activities pertaining to National Pension System does not fulfill any of the eligibility criteria as specified in these regulations, may request the Authority by making an application seeking exemption from fulfillment of such of the eligibility criteria with due justification, (2) If in the opinion of the Authority, the non-fulfillment of any of the eligibility criteria by the applicant and of which relaxation is sought, would not prejudicially affect the interest of the subscribers, may grant exemption from such criteria by recording the reasons in writing. The Authority may in such circumstances impose such additional conditions as it may deem fit for grant of certificate of registration. Chapter III DUTIES AND RESPONSIBILITIES OF POINT OF PRESENCE 14. Duties and responsibilities of point of presence—(1) The point of presence shall perform the following duties through their service provider branches, including offices where the entire business operations are carried out totally on online platform in accordance with the provisions of the Act, rules and regulations and any guidelines and directions issued by the Authority and the operational service level agreements executed with the National Pension System Trust as also any standard operating procedure issued by the National Pension System Trust, based on the Authority’s guidelines,- (I) Duties in relation to initial customer interaction for National Pension System: (a) addressing queries of potential subscribers regarding National Pension System. (b) providing and displaying information, in accordance with the provisions of the scheme, as approved by the Authority including information relating to , application forms, offer documents or any other publicity material pertaining to National Pension System; (II) Duties in relation to subscriber registration: (a) receive the duly filled application form along with the Know Your Customer documentation as may be applicable from time to time and conduct customer due diligence procedures as required under the Prevention of Money Laundering Act, 2002 (17 of 2003) including the amendments thereof or any other law through effective use of Know Your Customer verification processes laid down by the Authority for all subscribers; (b) the point of presence shall carry out checks, as specified in the service standards as provided in the agreement between the point of presence and National Pension System Trust; (c) the point of presence shall ensure maintenance and reporting of all transactions by subscribers in accordance with the provisions of Prevention of Money Laundering Act, 2002 (17 of 2003) including amendments thereof and the rules framed thereunder from time to time, as may be applicable; (d) the point of presence is responsible for collecting and transmitting, the initial contribution at the time of opening of National Pension System account and subsequent contributions of subscribers made by them to the Trustee Bank; (e) the point of presence shall be responsible for delivering the subscriber registration form and supporting documents to the central recordkeeping agency or its representative which is approved by the Authority; (f) the point of presence shall transfer the National Pension System contributions to the National Pension System Trust account maintained with the Trustee Bank and upload the subscriber contribution files with the central recordkeeping agency within the timeframe specified by the service standards for point of presence as provided in the agreement between point of presence and the National Pension System Trust; (2) Handling of subscriber requests such as the following:- (a) the point of presence is responsible for receiving and processing switching requests from subscribers among schemes and among pension fund; (b) the point of presence shall upload all requests from subscribers into the central recordkeeping agency system within the timeframe specified by the service standards, as provided in the agreement between the point of presence and the National Pension System Trust; (c) In respect of the subscriber withdrawal requests,-the point of presence shall be responsible for receiving and processing, from subscribers for withdrawal of funds invested within the timeframe specified by the service level standards and in accordance with Pension Fund Regulatory and Development Authority (Exit and Withdrawal) regulations, 2015 or guidelines issued by the Authority. The point of presence shall not charge any extra charge for the service, other than what is permitted by the Authority; (d) The Point of Presence shall be responsible for attending to subscriber’s request for shift from one point of presence to another point of presence or to another point of presence service provider branch; - recording the request - updating records in central recordkeeping agency system; (e) the point of presence shall be responsible for receiving and processing requests from subscribers for new I-Pin or T-Pin or Permanent Retirement Account Number card and other subscriber details; (f) the point of presence is responsible for any other National Pension System account related service, as may be specified by Authority from time to time; (g) the point of presence shall be responsible for all requests for the National Pension System related services received from the subscribers through online mode wherever the same is made available by the point of presence; (h) the point of presence shall be responsible for receiving grievances from subscribers and uploading the same into centralized grievance management system and following up till their redressal. (3) The point of presence shall be responsible for the following in the event of cancellation or suspension of registration by the Authority or where it ceases to be a point of presence:— (a) the point of presence shall transfer all the data or records or documents or money (uncleared funds and cleared funds that have not been transferred to the Trustee Bank) of subscribers to any other point of presence as may be authorized or appointed by Authority for providing services, at the time of termination. All such documents and records shall be transferred without any cost to the new point of presence or its successor as may be determined by the Authority; (b) the point of presence, which has been directed to transfer such documents and records, shall extend all necessary cooperation and support to the successor points of presence; (c) on transfer of such documents and records, the transferor point of presence shall confirm to the transferee point of presence whether all such necessary documents and records have been transferred; (d) the point of presence, point of presence - corporate and point of presence – sub entity shall adhere to the service standards as laid down in the agreement between the point of presence and the National Pension System Trust; (e) the point of presence and point of presence – sub entity shall service the requests of the subscribers of any other pension scheme as referred to in clause (b) of sub-section (1) of sec 12 of the Act. 15. Charges to be charged to the National Pension System subscribers—(1) the charges that may be levied on the subscriber by the point of presence shall be subject to the limits and manner of collection as laid down by the Authority from time to time. No point of presence shall collect, in a direct or indirect manner, any charge or other levies in any mode or manner, from the subscriber, unless specified by Authority, from time to time. The charges payable by the subscriber to the points of presence shall comprise the following heads:— i. initial subscriber registration and contribution upload charges subject to the limits as may be specified by the Authority from time to time. ii. subsequent transaction charges subject to the limits as may be specified by the Authority from time to time. (2) no other charges, other than that specified by the Authority from time to time shall be collected from the subscribers. 16. Maintenance of books of account and audit of accounts—(1) The following books of accounts be kept by the point of presence:— (a) details of applications received and submitted to the central recordkeeping agency for registration and Permanent Retirement Account Number data generated for all such applicants; (b) details of money received from the subscribers – in cash, by cheque, or any authorized form of remittance; (c) details of cash held on a daily basis; (d) details of subscriber-wise money remitted to the Trustee Bank; (e) details of subscriber-wise instructions sent to the central recordkeeping agency. (2) The point of presence shall follow the Segmental Method of Accounting (under the relevant accounting standards) for its National Pension System related activities and the same shall be audited.. The format and scope of such an audit shall be in conformity with the notifications, guidelines, circular etc. issued by Authority from time to time. The Audit certificate shall be submitted to the Authority as soon as practicable upon finalisation of books of point of presence’s accounts but not later than ninety days from the date of such finalisation of such accounts. 17. Separation of National Pension System accounts from other businesses—Each point of presence shall ensure that all matters related to National Pension System including maintenance of accounts, flow of funds in respect of the National Pension System business are maintained separately or distinctly from its other businesses. 18. Systems and procedures—(1) Each point of presence of the National Pension System shall have all the technological capabilities, infrastructures and necessary systems and procedures that may be required to enable it to co-ordinate with other intermediaries. (2) Each point of presence shall be responsible for the acts of commissions or omissions by its employees or the persons whose services it has procured. 19. Redressal of subscriber grievances—(1)The overall responsibility of the point of presence for redressal of subscriber grievances shall be as provided under the Pension Fund Regulatory and Development Authority (Redressal of Subscriber Grievance) Regulations, 2015. The point of presence shall ensure that an effective mechanism to receive and redress complaints from the subscribers is in place and the grievances are examined and redressed in a prompt and fair manner. (2) The point of presence shall inform a subscriber at the commencement of relationship with the subscriber and at such other time when the information is likely to be required by the subscriber of :— (i) the subscriber’s right to seek redress for any complaints, including through the Pension Fund Regulatory and Development Authority (Redressal of Subscriber Grievances) Regulations, 2015; (ii) the processes followed by the point of presence to receive and redress complaints from its subscribers. (3) The point of presence shall display the grievance redressal mechanism prominently on its website. 20. Appointment of Compliance officer—(1) Each point of presence shall appoint a compliance officer who shall be responsible for monitoring compliance by it of the provisions of Act, rules and regulations, notifications, guidelines, instructions issued by the Authority for redressal of subscriber grievances. (2) The compliance officer shall immediately and independently report any non-compliance observed by him or her to the Authority. 21. Code of Conduct—Every point of presence shall adhere to the code of conduct at all times as specified in Schedule II. CHAPTER IV INSPECTION AND AUDIT 22. Inspection and audit—(1) The Authority may if it considers necessary at any time, undertake directly or through its authorized representative an inspection and audit of the books, accounts, records including the telephone records and electronic records and documents of the point of presence for any purpose, including the purposes as specified under this regulation. (2) The purposes refer