Introduction: The Pension Fund Regulatory and Development Authority (PFRDA) recently introduced amendments to the Central Recordkeeping Agency (CRA) regulations in 2023. These amendments aim to refine operational standards, governance, and technology architecture concerning pension schemes. Let’s delve into the key alterations and their implications.
Detailed Analysis:
1. Objective Refinement: The amendments redefine the objective of the regulations, emphasizing eligibility criteria and operational standards for central recordkeeping agencies. The focus is on safeguarding the interests of subscribers through robust governance and technological standards.
2. Definition Clarifications: The amendments include comprehensive clarifications, such as the definition of “auditor” and “compliance officer,” ensuring alignment with relevant legal frameworks and technological advancements.
3. Eligibility Criteria Enhancement: Significant enhancements are made in eligibility criteria, encompassing financial prerequisites, operational capabilities, and compliance standards. These amendments aim to ensure that only capable entities with substantial experience manage pension fund recordkeeping.
4. Disclosure and Compliance: The regulations mandate stringent disclosure requirements for applicants, including past legal proceedings and ongoing compliance obligations. This transparency fosters accountability and trust in the regulatory framework.
5. Operational Standards: The amendments introduce stringent operational parameters, emphasizing technology standards, fraud prevention mechanisms, and service level agreements. These measures are aimed at enhancing efficiency, security, and reliability in pension fund administration.
6. Exit Management: Provisions for exit management plans ensure smooth transitions in case of agency changes, emphasizing continuity of service and subscriber protection. Such plans mitigate risks associated with operational disruptions and ensure regulatory compliance.
7. Inspection and Audit: Enhanced provisions for inspection, audit, and valuation mechanisms empower regulatory authorities to monitor agency performance effectively. These measures promote accountability, transparency, and adherence to regulatory standards.
Conclusion: The amendments to the PFRDA (CRA) regulations mark a significant step towards enhancing the governance and operational standards of central recordkeeping agencies. By prioritizing transparency, accountability, and technological innovation, these changes aim to strengthen the pension fund ecosystem and safeguard the interests of subscribers. It’s imperative for stakeholders to adhere to these regulations and actively contribute to the evolution of a robust pension fund regulatory framework.
PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY
NOTIFICATION
New Delhi, the 9th February, 2024
PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY (CENTRAL RECORDKEEPING AGENCY) (AMENDMENT) REGULATIONS, 2023
No. PFRDA/16/01/08/0048/2017-REG-CRA.—In exercise of the powers conferred by sub-section (1) read with clauses (e), (j), (k), (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 to amend the Pension Fund Regulatory and Development Authority (Central Recordkeeping Agency) Regulations, 2015, namely:-
1. These regulations may be called the Pension Fund Regulatory and Development Authority (Central Recordkeeping Agency) (Amendment) Regulations, 2023.
2. These shall come into force on the date of their publication in the official gazette.
3. In the Pension Fund Regulatory and Development Authority (Central Recordkeeping Agency) Regulations, 2015, as amended from time to time (hereinafter referred to as ‘the principal regulations’), the following amendments are made:–
I. In sub-regulation (1) of regulation 1 of the principal regulations, the objective of regulation shall be substituted as follows:
“The objective of the regulations is to specify eligibility criteria and set standards for technology architecture, governance, and operational service levels of central recordkeeping agency to protect the interest of subscribers.”
II. In sub-regulation (1) of regulation 2 of the principal regulations,
i. Clause (b) shall be substituted as follows:
“(b) “auditor” shall have the same meaning as defined under section 141 of Companies Act, 2013 and includes system auditor.
Explanation.– System auditor means an auditor empaneled with CERT-in or Ministry of Electronics and Information Technology (MeitY), Government of India;”
ii. Clause (c) shall be deleted;
iii. Clause (d) shall be deleted;
iv. Clause (e) shall be substituted as follows:
“(e) “compliance officer” means an employee of the central recordkeeping agency designated as such by its board, for monitoring compliance of the provisions of the Act, rules, regulations, guidelines, circulars, directions and instructions issued by the Authority;”
v. Clause(h) shall be deleted;
vi. After clause (h), new clause (ha) shall be inserted as follows:
“(ha) “key personnel” includes,–
(i) key managerial personnel (KMP) as defined under section 2(51) of the Companies Act, 2013 including any person appointed as the managing director or executive director;
(ii) non-executive directors;
(iii) a person serving as head of department of cybersecurity, operations, risk management, technology including person(s) who stands higher in hierarchy to such head of department(s) and directly reporting to the managing director or executive director;
(iv) compliance officer;
(v) principal officer;
(vi) any person designated as such by board of central recordkeeping agency; and
(vii) such other officer of central recordkeeping agency as may be instructed by the Authority to be so;”
vii. Clause (m) shall be substituted as follows:
“(m) “principal officer” means any key employee of the central recordkeeping agency designated as such by its board to be responsible for the activities of a central recordkeeping agency;”
viii. New definition clause (na) shall be inserted after clause (n) as follows:
“(na) “stakeholder” in respect of pension schemes covered under the Act shall include,–
(i) subscriber(s);
(ii) Central and State Governments, Union Territories, Government Nodal Offices, Autonomous Bodies of Central and State Governments, and any other organisation which has covered its employee(s) under a pension scheme covered under the Act;
(iii) intermediaries; and
(iv) annuity service provider(s) and any other person(s) connected with pension schemes;”
III. Sub-regulation (2) of regulation 2 of the principal regulations shall be deleted;
IV. Sub-regulation (1) of regulation 3 of the principal regulations shall be substituted as follows:
“3. Application for grant of registration and application fee.– (1) An eligible applicant may apply for grant of certificate of registration as a central recordkeeping agency in the application form determined by the Authority.”
V. Sub-regulation (4) of regulation 3 of the principal regulations shall be deleted;
VI. Sub-regulation (5) of regulation 3 of the principal regulations shall be substituted as follows:
“(5) Applicant shall pay a non-refundable application fee of rupees ten lakh plus applicable taxes and levies thereon, along with its application to the Authority.”
VII. Regulation 4 of the principal regulations shall be substituted as follows:
“4. Eligibility criteria.– An applicant desirous to act as a central recordkeeping agency shall fulfil the following eligibility criteria as on the day of making an application.
(1) The applicant shall,–
(a) be a body corporate incorporated under the Companies Act, 2013, or under any previous company law or under any central enactments, and registered under the Goods and Services Tax Act;
(b) have experience of at least five years of performing recordkeeping of ownership of financial assets and related services in India; and
(c) have experience in managing over five lakh unique customer accounts per year over the preceding three financial years.
(2) The applicant shall have,–
(a) net worth of at least rupees one hundred crore, as on the last day of the preceding financial year. Explanation.– Net worth means as defined under section 2(57) of the Companies Act, 2013; and
(b) made profit after tax in at least three out of the five preceding financial years and not have incurred cash loss in such two financial years.
Explanation.– Cash loss means
(i) in case of a company preparing its financial statements in accordance with accounting standards (AS), the figure of net profit/loss after taxes shown by the statement of profit and loss is adjusted for the effects of transactions of non-cash nature such as depreciation, amortization, and impairment loss or its reversal.
(ii) in case of a company preparing its financial statements in accordance with Indian accounting standards (Ind AS), the figure of profit or loss (excluding other comprehensive income) shown by the statement of profit and loss is adjusted for the effects of transactions of non-cash nature such as depreciation, amortization and impairment loss or its reversal.
(3) The applicant shall possess,–
(a) information technology capabilities;
(b) experienced manpower of at least one hundred professional staff with at least fifty staff in the area of operation and technology management; and
(c) experience of developing and managing technology-based administration and recordkeeping system.
(4) The applicant and its key personnel shall be a ‘fit and proper person’ as specified in Schedule IV.
(5) The applicant shall not either control, or hold twenty per cent. or more of equity share capital, directly or indirectly, in any intermediary and vice-versa.
Explanation.– Control means as defined under section 2(27) of the Companies Act, 2013.
(6) Any other criteria laid down in the selection process initiated by the Authority.”
VIII. Regulation 5 of the principal regulations shall be substituted as follows:
“5. Disclosure of information.– (1) While filing the application for registration, the applicant shall disclose all relevant information including any action or legal proceedings initiated against it, its key personnel in the past including the pending proceedings, for any material breach or non-compliance by them of any law, rules, regulations, and directions of the Authority or of any other regulatory body or the Government.
(2) During pendency of the application, the applicant shall inform the Authority of any changes in the information furnished under sub regulation (1) within seven days of such change.”
IX. Sub-regulation (1) of regulation 6 of the principal regulations shall be substituted as follows:
“6. Furnishing of Information and clarification.– (1) The Authority may require the applicant to furnish further information or clarification, for consideration of its application.”
X. Sub-regulation (1) of regulation 7 of the principal regulations shall be substituted as follows:
“7. Verification of information.– (1) While processing the application, the Authority may,–
(a) verify the documents, inspect the infrastructure, and resources, including technological capabilities which the applicant is required to fulfil; and
(b) seek report from any agency which may have a bearing on the application.”
XI. Clause (a) of sub-regulation (1) of regulation 8 of the principal regulations shall be substituted as follows:
“(a) whether the applicant satisfies the eligibility criteria specified in these regulations and other requirements laid down under the selection process;”
XII. Sub-regulation (3) of regulation 8 of the principal regulations shall be substituted as follows:
“(3) Before rejecting an application, the Authority shall give a notice to the applicant to rectify the defect(s) in its application, within fifteen days of receipt of such notice from the Authority.
Provided that where the Authority is of the prima facie opinion that the registration ought not to be granted, it shall communicate the reasons for forming such an opinion and give the applicant an opportunity to explain why its application should be accepted, within fifteen days of the receipt of the communication from the Authority, to enable it to form a final opinion.
Provided further that where an application has been rejected on the grounds of being incorrect, false or misleading in nature or has omitted to disclose material facts, no fresh application from the applicant for grant of certificate of registration shall be considered for a period of one year from the date of rejection.”
XIII. Clause (a) of sub-regulation (1) of regulation 10 of the principal regulations shall be substituted as follows:
“(a) where the applicant proposes to change its status or constitution, it shall obtain prior approval of the Authority. Explanation.– Change in status or constitution shall include the following,–
(i) amalgamation, demerger, consolidation or any other kind of corporate restructuring under the provisions of the Companies Act, 2013 (13 of 2013) or the corresponding provision of any other law for the time being in force or any agreement or arrangement which would have the effect of such corporate restructuring;
(ii) any change in control of the central recordkeeping agency.
Explanation.– Control means as defined under section 2(27) of the Companies Act, 2013; and
(iii) any change in the legal status of the central recordkeeping agency;”
XIV. Clause (b) of sub-regulation (1) of regulation 10 of the principal regulations shall be substituted as follows:
“(b) it shall at all times meet the eligibility criteria specified in these regulations and other requirements laid down under the selection process.
Provided that the Authority may impose any other conditions as it may deem fit in the interest of subscribers or orderly development of the pension schemes covered under the Act or for regulation of the working of the central recordkeeping agency, and the central recordkeeping agency shall comply with such conditions.”
XV. Clause (f) of sub-regulation (1) of regulation 10 of the principal regulations shall be substituted as follows:
“(f) it shall provide true and correct disclosure of information, as specified under the regulations, on a continuous basis, besides such other disclosures required by the Authority. Further, it shall furnish any material change in the information furnished to the Authority including under sub-regulation (1) of regulation 5, immediately but not later than fifteen days of the occurrence of such change;”
XVI. New clause (h) shall be inserted after clause (g) of sub-regulation (1) of regulation 10 of the principal regulations as follows:
“(h) it shall submit a certificate evidencing compliance with the eligibility conditions. Such certificate shall be placed before its board and its observations, if any, along with explanation thereon, shall be submitted to the Authority, within sixty days from the end of the financial year, or within sixty days from the expiry of tenure of its registration;”
XVII. Regulation 12 of the principal regulations shall be substituted as follows:
“12. Registration fee.– An applicant shall pay a non-refundable registration fee of rupees twenty five lakh plus applicable taxes and levies thereon, to the Authority.”
XVIII. Regulation 13 of the principal regulations shall be substituted as follows:
“13. Annual fee.– The central recordkeeping agency shall pay an annual fee plus applicable taxes and levies thereon, on quarterly basis at the rate of 0.05 times of the service charges, as specified in regulation 22 before the due date as may be determined by the Authority.”
XIX. Regulation 14 of the principal regulations shall be substituted as follows:
“14. Commencement of business.– (1) A central recordkeeping agency shall make an application in the format as may be determined by the Authority for grant of certificate of commencement of business, within six months from date of certificate of registration.
Provided that it shall obtain certificate of commencement of business before commencement of its operations.
Provided further that where an extension is required for obtaining the certificate of commencement of business, it shall apply at least thirty days before completion of six months from the date of certificate of registration. The Authority may provide an extension up to six months for reasons to be recorded in writing.
(2) A central recordkeeping agency while making an application for grant of certificate of commencement of business shall,–
(a) confirm the execution of service level agreements with other intermediaries;
(b) confirm the completion of system development, in the mode and manner, as determined by the Authority; and
(c) give an undertaking approved by its board that it will acquire CMMI level three certification and ISO 27001 certificate for services offered under central recordkeeping activity, within twelve months from the date of certificate of commencement of business.
(3) An application which is not complete in all respects and does not conform to requirements specified or determined in the selection process shall be rejected.
Provided that before rejecting an application for grant of certificate of commencement of business, the Authority shall give the central recordkeeping agency a reasonable opportunity of being heard.
Provided further that the Authority, on being satisfied that it is necessary to extend the period, may extend such period by such further time as it thinks necessary in order to enable the central recordkeeping agency to remove the objections indicated by the Authority.
(4) After considering all matters which are relevant for the efficient and orderly functioning of the central recordkeeping agency, the Authority shall grant certificate of commencement of business as per Schedule V.
(5) The central recordkeeping agency holding a certificate of commencement of business, shall at all times, abide by the code of conduct as specified in Schedule II.”
XX. Regulation 15 of the principal regulations shall be substituted as follows:
“15. Validity of certificate of registration.– The certificate of registration granted to a central recordkeeping agency shall remain valid unless suspended or cancelled by the Authority, in accordance with the regulations.”
XXI. Sub-regulation (1) of regulation 18 of the principal regulations shall be substituted as follows:
“18. Roles and responsibilities of central recordkeeping agency.– (1) The central recordkeeping agency shall do centralized recordkeeping, administration and customer service functions for all subscribers under the pension schemes covered under the Act, in accordance with the provisions of the Act, rules and regulations made thereunder and also operational service level standards or any standard operating procedures or guidelines, circulars, directions and instructions issued by the Authority.”
XXII. Clause (h) of sub-regulation (2) of regulation 18 of the principal regulations shall be substituted as follows:
“(h) assist the Authority or any other entity authorized by the Authority in enforcement of guidelines by providing the required data or information and reports on lapses and errors;”
XXIII. Clause (i) of sub-regulation (2) of regulation 18 of the principal regulations shall be substituted as follows:
“(i) improve the systems and processes as per the evolving needs and requirements;”
XXIV. Clause (l) of sub-regulation (2) of regulation 18 of the principal regulations shall be deleted;
XXV. Clause (m) of sub-regulation (2) of regulation 18 of the principal regulations shall be substituted as follows:
“(m) ensure suitable system driven mechanism to avoid duplication of individual pension account under same pension scheme across all sectors and across central recordkeeping agencies;”
XXVI. New clause (oa) shall be inserted after clause (o) of sub-regulation (2) of regulation 18 of the principal regulations as follows:
“(oa) ensure at all times compliance with the provisions of the Act, rules, regulations, guidelines, circulars, directions and instructions issued by the Authority;”
XXVII. New clause (ob) shall be inserted after newly inserted clause (oa) of sub-regulation (2) of regulation 18 of the principal regulations as follows:
“(ob) render quality services to stakeholder at all times;”
XXVIII. New clause (oc) shall be inserted after newly inserted clause (ob) of sub-regulation (2) of regulation 18 of the principal regulations as follows:
“(oc) ensure that intermediation and other operational costs under the pension schemes covered under the Act, are economical and reasonable;”
XXIX. New sub-regulation (2a) shall be inserted after sub-regulation (2) of regulation 18 of the principal regulations as follows:
“(2a) A central recordkeeping agency shall take all measures necessary for prevention of fraud and develop and implement a fraud prevention and mitigation policy in accordance with guidelines issued by Authority, including,–
(a) laying down internal controls to be followed and ensure that such controls are adequate and operating effectively; and
(b) making provision for indemnifying the subscriber for any loss on account of fraud or negligence on the part of the central recordkeeping agency, which has been established.
Explanation.– For the purpose of this regulation, the term internal control means the policies and procedures adopted by the central recordkeeping agency for ensuring the orderly and efficient conduct of its functions, including prevention and detection of frauds and errors, the accuracy and completeness of the records, and the timely preparation and submission of reliable compliance reports.”
XXX. New sub-regulation (2b) shall be inserted after newly inserted sub-regulation (2a) of regulation 18 of the principal regulations as follows:
“(2b) A central recordkeeping agency shall submit its annual report to the Authority. The annual report shall also contain the following,–
(a) a certification by the chief executive officer, in respect of following key responsibilities,–
(i) adequacy and effectiveness of internal processes and digital architecture controls;
(ii) compliance with the provisions of the Act, rules, regulations, guidelines, circulars, directions and instructions issued by the Authority, besides other applicable laws; and
(iii) adherence to the code of conduct;
(b) audit report in respect of audit of processes, operations and accounts of pension schemes covered under the Act.”
XXXI. The paragraph immediately after clause (l) of regulation 19 of the principal regulations, shall be substituted as follows:
“Explanation.– The generation of the reports shall be automated and system driven with suitable audit trail. The application so designed shall provide a view for the Departments, the Authority or the National Pension System Trust to access the reports automatically.”
XXXII. Clause (d) of regulation 20 of the principal regulations shall be substituted as follows:
“(d) central recordkeeping agency shall comply with the operational parameters and technology standards as laid down by the Authority.”
XXXIII. Sub-regulation (1) of regulation 22 of the principal regulations shall be substituted as follows:
“22. Service charges.– (1) A central recordkeeping agency may collect service charges plus applicable taxes, for providing services to the subscribers of the pension schemes covered under the Act. The services charges shall be determined through a price discovery process initiated by the Authority.”
XXXIV. Regulation 23 of the principal regulations shall be substituted as follows:
“23. Exit Management Plan.– (1) A central recordkeeping agency shall submit to the Authority an exit management plan within six months from the grant of certificate of commencement of business.
(2) An exit management plan shall contain the details including the following,–
(a) a detailed program of the transfer process including details of the means to be used to ensure continuing provision of the services throughout the transfer process or until the cessation of the services and of the management structure during the transfer;
(b) modalities for communication with the central recordkeeping agency’s sub-contractors, staff, suppliers, service providers and any related third party as are necessary to avoid any detrimental impact on the project’s operations as a result of the transfer; and
(c) provisions for contingent support to the replacement agency for a reasonable period after the transfer.
(3) The exit management plan shall be updated and submitted to the Authority within thirty days from the end of each financial year.”
XXXV. Regulation 25 of the principal regulations shall be substituted as follows:
“25. Separation of accounts of pension schemes covered under the Act from its other activities and business.– A central recordkeeping agency shall separate the activities of maintenance of accounts, income, expenditure, cash flows, records, data and regulated assets relating to the pension schemes covered under the Act, from its other activities and business.”
XXXVI. Regulation 26 of the principal regulations shall be substituted as follows:
“26. Inspection and audit.– (1) The Authority shall inspect or audit central recordkeeping agency at regular intervals as it deems fit.
Notwithstanding the above, it may at any time as it deems fit, undertake directly or through an auditor or its authorized representative, an inspection or audit of the books, accounts, records including the call records and electronic records and documents of a central recordkeeping agency for the purposes as specified under this regulation.
(2) The purposes referred to in sub-regulation (1) may include,–
(a) ascertaining the infrastructural capabilities, systems and procedures;
(b) ensuring that the books of account, records including call records and electronic records and documents are being maintained in the manner required under these regulations;
(c) ascertaining whether adequate internal control systems, procedures and safeguards have been established and are being followed by the central recordkeeping agency;
(d) ascertaining whether the provisions of the Act, rules or regulations made thereunder or guidelines, circulars, directions and instructions issued by the Authority are being complied with;
(e) inquiring into the complaints received from subscribers, nodal offices, intermediaries or any other person on any matter having a bearing on the activities of the central recordkeeping agency; and
(f) inquiring suo motu into such matters as may be deemed fit in the interest of subscribers.
(3) The Authority may appoint or direct central recordkeeping agency to appoint a registered valuer for carrying out valuation of regulated assets. The central recordkeeping agency shall bear the expenses incurred for such valuation.”
XXXVII. New sub-regulation (3) shall be inserted after sub-regulation (2) of regulation 29 of the principal regulations as follows:
“(3) The report submitted by the authorized person or any documents or information so collected by such person, during the course of inspection or audit, would be admissible in any investigation or inquiry or any other proceedings before the Authority.”
XXXVIII. New clause (ha) shall be inserted after clause (h) of sub-regulation (1) of regulation 32 of the principal regulations as follows:
“(ha) fails to obtain the certificate of commencement of business, within the time granted by the Authority;”
XXXIX. Clause (i) of sub-regulation (1) of regulation 32 of the principal regulations shall be substituted as follows:
“(i) any other reason which in the opinion of the Authority warrants suspension or cancellation of the certificate of registration granted.”
XL. Sub-regulation (4) of regulation 32 of the principal regulations shall be deleted;
XLI. Regulation 33 of the principal regulations shall be substituted as follows:
“33. Surrender of certificate of registration.– (1) A central recordkeeping agency may surrender its certificate of registration by making a request to the Authority.
(2) For consideration of such request, the Authority may require the central recordkeeping agency to satisfy the following,–
(a) arrangements made by it for maintenance and preservation of records and other documents required to be maintained under the Act, rules, regulations, guidelines, circulars, at its own cost and expense, to ensure continuity of service to subscribers;
(b) rectifying the defaults and pending actions, if any;
(c) redressal of subscriber grievances; and
(d) any other measures to be taken in the interest of the subscribers.
(3) While considering the request for surrender, the Authority may impose such conditions upon the central recordkeeping agency as it deems fit for the protection of interest of the subscribers.
(4) No request for surrender shall be entertained from a central recordkeeping agency in respect of which any investigation, inquiry or adjudication has been initiated or is contemplated by the Authority.
(5) No surrender shall be permitted unless the Authority is satisfied that the central recordkeeping agency has complied with or has taken steps to comply with the requirements under sub-regulation (2) and other conditions, if any, under sub-regulation (3).
(6) Where the Authority has accepted the request for surrender, it shall cancel the certificate of registration granted to the central recordkeeping agency and inform central recordkeeping agency within seven days and place such information on its website and also direct the central recordkeeping agency to place the information on its website and disseminate the information, in such manner, as may be required.”
XLII. Regulation 34 of the principal regulations shall be substituted as follows:
“34. Effect of suspension or cancellation of certificate.– (1) On and from the date of suspension of the certificate of registration, the central recordkeeping agency shall, where directed,–
(a) cease to transact fresh business under the pension schemes covered under the Act, as the case may be;
(b) take such action in respect of the assets including regulated assets, records, documents or information that may be in the custody or control of the central recordkeeping agency, within the time limit and in the manner as may be required under the relevant regulations or as may be directed by the Authority;
(c) transfer at its own cost the assets, records, documents or information that are in its custody or control to another central recordkeeping agency in the form and manner as may be directed by the Authority;
(d) provide at its cost and expense, all the necessary support in ensuring smooth transfer of all the assets under its management and where required by the National Pension System Trust or the Authority, and make such public announcement or disclosure as may be conducive to subscriber’s interest, regarding such transfer of assets. It shall also ensure that the transfer of all the relevant documents, record or information is made in accordance with the directions issued by the Authority;
(e) the transfer of such assets including regulated assets shall be undertaken in accordance with the guidelines or instructions that may be issued by the Authority; and
(f) the central recordkeeping agency shall be subject to the directions of the Authority until all such transfers or actions are completed or until, the certificate of registration remains suspended.
(2) On and from the date of cancellation of the certificate of registration, the concerned central recordkeeping agency shall,–
(a) cease to carry on and wind up its affairs qua the activities in respect of which registration has been granted;
(b) return the certificate of registration so cancelled to the Authority and inform such other agencies, as may be directed by the Authority with regard to the said fact and disseminate the information on its website and in such other manner as may be directed;
(c) carry out any other directions within the time limits given by the Authority, and report compliance of the same;
(d) make provisions as regards liability incurred or assumed by it;
(e) take such other action including the action relating to any records or documents and assets of the subscribers that may be in the custody or control of such central recordkeeping agency, within the time limit and in the manner, as may be required; and
(f) transfer or dispose of the regulated assets in the manner as may be directed by the Authority.”
XLIII. Clause (d) of regulation 38 of the principal regulations, shall be substituted as follows:
“(d) debarring a key personnel of the noticee from being employed or associated with any intermediary or any other person for the period provided in the order;”
XLIV. Sub-regulation (6) of regulation 46 of the principal regulations shall be substituted as follows:
“(6) The central recordkeeping agency shall inform the Authority about any action or legal proceedings initiated against it, or its key personnel in the past including the pending proceedings, as well as those which have been initiated after grant of registration certificate, for any material breach or non-compliance by them of any law, rules, regulations, and directions of the Authority or of any other regulatory body or Government.”
XLV. New Schedule IV shall be inserted after Schedule III of the principal regulations as follows: “SCHEDULE IV
PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY (CENTRAL RECORDKEEPING
AGENCY) REGULATIONS, 2015
[See regulation 4]
CRITERIA FOR DETERMINING A ‘FIT AND PROPER PERSON’
(1) For the purpose of determining as to whether any person is ‘fit and proper person’, the Authority may take into account any criteria as it deems fit, including but not limited to the following,–
PART A
(a) financial integrity,
(b) absence of convictions or civil liabilities,
(c) competence,
(d) good reputation and character,
(e) efficiency and honesty,
(f) financial solvency and net worth
PART B
A person shall not be considered as a” fit and proper person” if any of the following disqualifications are incurred,–
(i) criminal complaint or information under section 154 of the Code of Criminal Procedure, 1973 (2 of 1974) has been filed against such person by the Authority and which is pending;
(ii) charge sheet has been filed against such person by any enforcement agency in matters concerning economic offences and is pending;
(iii) an order of restraint, prohibition or debarment has been passed against such person by the Authority or any other regulatory authority or enforcement agency in any matter concerning securities laws or financial markets and such order is in force;
(iv) license or registration has been cancelled by any financial sector regulators during last five years;
(v) recovery proceedings have been initiated by the Authority against such person and are pending;
(vi) an order of conviction has been passed against such person by a court for any offence involving moral turpitude or involving economic offences or fraud;
(vii) any winding up proceedings have been initiated or an order for winding up has been passed against such person;
(viii) any insolvency proceeding is pending against such person or where he has been declared insolvent and not discharged;
(ix) such person has been found to be of unsound mind by a court of competent jurisdiction and the finding is in force;
(x) such person has been categorized as a wilful defaulter;
(xi) such person has been declared a fugitive economic offender; or
(xii) any other disqualification as may be determined by the Authority.
(2) Where a person has been declared as not fit and proper by an order of the Authority, such a person shall not be eligible to apply for any registration during the period provided in the said order or for a period of five years from the date of effect of the order, if no such period is provided in the order.
(3) In the opinion of the Authority, where the central recordkeeping agency or any its key personnel, at any point of time ceases to satisfy the criteria under PART A of clause (1) or incurs any disqualification or disability under PART B of clause (1), its certificate of registration is liable to be suspended or cancelled, in accordance with the provision of these regulations.
Provided that the central recordkeeping agency shall remove its key personnel, ceasing to satisfy the criteria, under clause (1) within thirty days, from such cessation and inform the Authority of the action taken.”
XLVI. New Schedule V shall be inserted after Schedule IV of the principal regulations as follows:
“SCHEDULE V
PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY (CENTRAL RECORDKEEPING
AGENCY) REGULATIONS, 2015
[See Regulation 14(4)]
CERTIFICATE OF COMMENCEMENT OF BUSINESS
PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY
CERTIFICATE OF COMMENCEMENT OF BUSINESS AS CENTRAL RECORDKEEPING AGENCY
____________________________________________ which has been granted a certificate of registration as central
recordkeeping agency vide ___________ on____________ is hereby allowed to commence the activities/business as central recordkeeping agency for the pension schemes regulated by the Pension Fund Regulatory and Development Authority on this ____ day of _____ 20__
Place:
By order
For and on behalf of
Pension Fund Regulatory and Development Authority”
Dr. DEEPAK MOHANTY, Chairperson
[ADVT.-III/4/Exty./741/2023-24]
Note: The Pension Fund Regulatory and Development Authority (Central Recordkeeping Agency) Regulations, 2015 were published vide Notification No. PFRDA/12/RGL/139/7, on the 27th April, 2015 in the Gazette of India, Extraordinary, Part III, Section 4, No. 140, and were subsequently amended by the Pension Fund Regulatory and Development Authority (Central Recordkeeping Agency) (First Amendment) Regulations, 2018 published vide Notification No. PFRDA/12/RGL/139/7, on the 25th June, 2018 in the Gazette of India, Extraordinary, Part III, Section 4, No. 238, the Pension Fund Regulatory and Development Authority (Central Recordkeeping Agency) (Second Amendment) Regulations, 2020 published vide Notification No. PFRDA/12/RGL/139/7, on the 29th July, 2020 in the Gazette of India, Extraordinary, Part III, Section 4, No. 296, and the Pension Fund Regulatory and Development Authority (Central Recordkeeping Agency) (Amendment) Regulations, 2021 published vide Notification No. PFRDA/12/RGL/139/7, on the 14th June, 2021 in the Gazette of India, Extraordinary, Part III, Section 4, No. 237
