The bank has managed to collect only 19 forms.
State Bank of India (SBI) might have a network of 11,000 branches, but ever since the launch of the new pension scheme (NPS) nearly three months ago, the country’s largest bank has managed to collect only 19 forms from prospective investors.
Peeved at the way public sector banks — which are points of presence (PoPs) for opening of NPS accounts and collection of contributions — were going about the new scheme, the Pension Fund Regulatory and Development Authority (PFRDA) has shot off a letter to SBI Chairman O P Bhatt, asking why the scheme was not being pushed.
While Bhatt is yet to respond, the missive, sent around 10 days ago, seems to have done the trick with the bank’s 26 designated branches accepting 17 forms since July 16. Though the latest data is not available, compared with other public sector banks (barring IDBI Bank), which have registered themselves as PoPs, SBI has fared better.
| NO HARDSELLING | ||
| PoP | Branches | No of forms collected |
| ICICI Bank | 49 | 164 |
| Kotak Mahindra Bank | 25 | 160 |
| Cams | 25 | 135 |
| Axis Bank | 51 | 106 |
| UTI AMC | 25 | 88 |
| Reliance Capital | 25 | 73 |
| IL&FS Securities | 35 | 61 |
| South Indian Bank | 55 | 34 |
| IDBI Bank | 52 | 14 |
| Citibank | 25 | 6 |
| SBI | 26 | 2 |
| Total | 843 | |
| Cams: Computer Age Management Services Status as on July 16, 2009 Source: PFRDA | ||
“We did not accept too many application forms through SBI’s associate banks. But we certainly expected a better show from SBI, Citi and IDBI Bank. It is quite clear that these banks made no preparation to ensure that the scheme is successful,” said a PFRDA official. Here it may be mentioned that existing regulations bar PoPs from hawking or pushing any particular fund manager.
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As per the multi-layered NPS structure, PoPs are at the start of the chain, responsible for opening accounts and collecting the subscription to the scheme. Though players such as SBI, ICICI, UTI and Reliance are acting as PoPs, they have separate subsidiaries to deal with fund management activities.
When approached to open an NPS account, bank executives often fail to explain the details of the scheme, or name the branches where an account can be opened. PoPs, on their part, blame this failure on PFRDA, saying the authority is not making available adequate information.
Also, in the absence of tax benefits, investment consultants have been advising individuals against investing in the NPS. That apart, a management fee of only 0.09 basis points is also working as a dampener for fund managers. The result is, fund managers are pushing mutual fund and insurance policies that offer retirement benefits as well as higher commission.
When contacted, PFRDA Chairman D Swarup refused to discuss the performance of the PoPs. He, however, said that the tax benefits offered in the Budget would encourage individuals to invest in the NPS.
In addition, an exemption from payment of dividend distribution tax (DDT) and securities transaction tax (STT) would lower the transaction cost for fund managers, Swarup said.
The Budget had also proposed to allow investment in the NPS to be included in the tax exemption available under Section 80C of the Income Tax Act. Besides, tax benefits are proposed to be made available if a subscriber uses the entire maturity amount to purchase annuities.