SEBI wants NSDL to set up separate unit for pension fund entry

23 August 2007

Mumbai: The Securities and Exchange Board of India (Sebi) has prescribed certain criteria for the National Securities Depository (NSDL), including the setting up of a separate unit, to be eligible to act as central record keeping agency (CRA) for pension funds, under the new pension scheme for central and state government employees.

The Sebi board, at its meeting decided that NSDL could act as CRA only through a separate strategic business unit (SBU). Further, the depository will have to hive off other activities within three years to a separate entity without any financial and legal links with NSDL. But, financial integrity should be ensured by NSDL till then, said sources.

Another eligibility condition is that NSDL's other activity should not erode the net worth required for carrying out the depository activity in securities. NSDL is required to get the approvals from its board and sponsor for carrying on other activities.

NSDL should also get additional insurance cover for risks, if any, of other activities. The depository will also have to meet other financial conditions, if required, in the interest of beneficial owners, said sources.

Sebi said NSDL will have to meet all these criteria and it is required to file its application before it for approval.