National Pension System - ESAF Small Finance Bank

National Pension System

National Pension System (NPS) is a perfect solution for retirement planning. It provides old age income with reasonable market-based returns. It is based on unique Permanent Retirement Account Number (PRAN) which is allotted to every subscriber for NPS which comes with the dual advantage of saving tax and assuring a regular income in the future. NPS investments are fully tax exempted.
In case of any queries, please write to : nps@esafbank.com

NPS Account offers the following benefits:

  • Regulated: NPS is regulated by PFRDA (Pension Fund Regulator under Govt. of India)
  • Transparency: NPS account can be accessed online to make contributions and track investments.
  • Exclusive Tax Benefits:

For Retail Sector :

  • (1) NPS offers deduction of Rs 150,000/- on contributions made from your taxable income (under Section 80 CCD (1) of the Income Tax Act,1961) subject to
            -10% of salary (Basic + DA) – for salaried employees
            -20% of gross total income – for self-employed persons

    Note: The maximum deduction from the taxable income is limited Rs.1.5 lac, as permitted under Sec 80CCE of Income tax Act,1961

    (2) Further an additional deduction from the taxable income to the extent of Rs 50,000 under Section 80 CCD(1B)
            Deduction under Sec.80CCD (1) -Rs.1.50 lac
            Deduction under Sec.80CCD (1B) -Rs.0.50 lac
            Total Deduction -Rs.2.00 lac

For Corporate Sector :

  • Employees :
    Under Corporate NPS model, employer’s contribution on behalf of the employee (up to 10% of Basic+D.A) can be claimed as deduction under 80 CCD (2). Tax benefit u/s 80CCD (1B) and 80CCD (2) are over and above Rs.1.5 lacs limit u/s 80C.
  • Employer :
    Corporate can avail of tax benefit u/s 36 (i) (IV) of Income Tax Act, 1961, on the contribution deposited by it.

Who can open an NPS Account?

  • Any Citizen of India.
  • Age between 18 years to 70 years.
  • Applicant should be KYC compliant.
  • Applicant should not have a pre-existing NPS Account.

The NPS is largely focused on one's retirement. While up to 60% of the maturity corpus can be withdrawn as a lump sum on maturity, the balance is compulsorily annuitized, i.e., balance is used to fund the annuity (pension) after retirement.
Subscribers have the option to open two types of NPS Accounts under the same Permanent Retirement Account Number (PRAN):

  • Tier I: Contributions done to this account are eligible for additional tax deduction benefit of up to Rs. 50,000/- under section 80CCD (1B), over and above Rs.1,50,000/- u/s 80CCD(1). Withdrawals are restricted and subject to terms and conditions.
  • Tier II: Subscribers can invest an additional amount in Tier II NPS Account. Subscriber is free to withdraw his entire accrued corpus under Tier II at any point of time. No tax benefits are available in this account.

Subscriber can enroll through the online application mode from the convenience of his home / office.The account can be opened by all Indian Citizens between 18 to 70 Years.

Steps for online account opening:

  • Subscriber can enroll for NPS by clicking on 'Online Registration' option under NPS (National Pension System)
  • Subscriber will get online form, which needs to be filled with mandatory fields.
  • Acknowledgement number for subscriber registration (account opening) will be generated. There will be provision to complete the registration (account opening) later based on acknowledgement number search.
  • Subscriber's KYC will be done through PAN (OTP based authentication) and the address maintained with the existing account of ESAF Small Finance Bank. Please ensure the address mentioned is the same as maintained with the bank’s database. Aadhaar based KYC verification can also be opted as per the convenience of subscriber.
  • Subscriber enters remaining details like Bank details, scheme details, nominee details etc.
  • Subscriber needs to upload photograph , signature ,Cheque and PAN
  • Subscriber will enter the contribution amount (this is the amount subscriber wants to invest in NPS) and click for payment.
  • Subscriber will be directed to online payment platform wherein subscriber will complete the payment through any net-banking option of an existing bank.
  • On successful payment, PRAN will be allotted to the subscriber and PDF form will be generated based on data given. This can be saved for reference.
  • The subscriber will also have an option of e-Sign/dual OTP authentication. Once eSign/dual OTP authentication is completed, the physical form need not be submitted.

NPS Account opening Contribution:

The NPS is largely focused on one's retirement. While up to 60% of the maturity corpus can be withdrawn as a lump sum on maturity, the balance is compulsorily annuitized, i.e., balance is used to fund the annuity (pension) after retirement. This annuity is fully taxable in the year of receipt as income from other sources.

NPS on mobile Application: A mobile app for NPS Subscribers called 'NPS by NSDL e-Gov' is available. The Subscriber can now view their NPS account, scheme holdings, latest Net Asset Value (NAV) and the total value of the schemes through this app. Subscribers can view the transaction statement for a particular financial year, as well as details of last five contributions. Subscriber can switch among fund managers, asset classes and change the allocation ratio.
Portability: With online accessibility, Subscriber can access their account across geographies. Each subscriber who joins the NPS is allotted a unique Permanent Retirement Account Number (PRAN) number. PRAN will remain the same throughout the life.

Pension Fund Regulatory and Development Authority (PFRDA) is a pension regulator which was established by the Government of India. PFRDA promotes old age income security by establishing, developing and regulating pension funds and protects the interests of subscribers in schemes of pension funds and related matters.

Central Recordkeeping Agency (CRA) - the sector regulator PFRDA has appointed National Securities Depository Limited (NSDL) & Karvy Computershare to offer NPS.

Point Of Presence (POP) - The first point of interaction between the subscriber and the NPS architecture.
POP shall facilitate the subscriber registration and submission of contributions. ESAF Small Finance Bank Ltd. is registered with PFRDA as a Point of Presence (POP).

Pension Fund Manager (PFM)

The contributions invested in NPS are managed by 7 Pension Fund Managers (PFM) appointed by PFRDA. The Subscriber can choose any one of the below given entities:
• HDFC Pension Management Company Limited
• UTI Retirement Solutions Limited
• Kotak Mahindra Pension Fund Limited
• LIC Pension Fund Ltd
• SBI Pension Funds Private Limited
• ICICI Prudential Pension Funds Management Company Limited
• Birla Sunlife Pension Management Limited

Annuity Service Providers

After completion of 60 years of age, the subscriber will have options to start Annuity. Below are Life Insurance Companies registered with PFRDA that offer Annuity:
• HDFC Standard Life Insurance Company Limited
• Star Union Dai-Chi Life Insurance Company Limited
• Life Insurance Corporation of India Limited
• ICICI Prudential Life Insurance Company Limited
• SBI Life Insurance Company Limited

Subscribers have the option to select allocation pattern for their investment across various asset classes.

There are 4 asset classes,namely, Equity,Corporate Bonds,Government Securities and Alternate Investment funds.

There are 2 investment patterns-Active choice and Auto choice.

Active Choice:

This option allows the subscriber the freedom to design the portfolio among 4 asset classes as below:

  • Equity (E): This is a 'High risk – High Return' option as the funds are invested in equity. Subscriber can choose to invest up to 75% in this class.
  • Corporate Bonds (C): Funds are invested in fixed income bearing instruments which offer medium returns.Subscriber can opt upto 100% in this class.
  • Government Securities (G): Funds are invested only in Government Securities.Subcriber can opt upto 100% in this class.
  • Alternate Investment Funds: New age securities including VC funds, PE etc. A maximum cap of 5% in this class.

Auto Choice- Life Cycle Fund

Three Life Cycle funds are available under Auto Choice

(i) LC75 – Aggressive Life Cycle Fund: The exposure in Equity Investments starts with 75% till age 35 and gradually reduces as per the age of the subscriber.
(ii) LC50- Moderate Life Cycle Fund : The exposure in Equity Investments starts with 50% till age 35 and gradually reduces as per the age of the subscriber.
(iii) LC 25- Conservative life cycle fund : The exposure in Equity Investments starts with 25% till age 35 and gradually reduces as per the age of the subscriber.

The default auto choice if the subscriber is not choosing any of the above option is Moderate life Cycle Fund.

In moderate life cycle fund, allocation in equity till the age of 35 years is 50% in "E" , 30% in "C" and 20% in "G" asset class. After the age of 35, asset allocation starts decreasing from "E" and "C" and increases in "G" till it reaches 10% in "E" & "C" and 80% in "G" asset class.

For subscribers who join NPS before 60 years of age:

A. Normal Exit–

a) When a subscriber reaches 60 years of age- he/she can opt for withdrawal and at least 40% of accumulated pension corpus to be used for purchasing an annuity that would provide a regular pension. The remaining funds can be withdrawn as lump sum. This is applicable if the corpus is more than Rs.5 lacs.
b) If the total accumulated pension corpus is less than or equal to Rs. 5 lacs, Subscriber can opt for 100% lump sum withdrawal.
c) Also, the subscriber has the option to continue the NPS account up to 75 years of age.

B. Premature Exit :

a) In case of pre-mature exit from NPS, i.e. before attaining the age of 60 years of age - at least 80% of the accumulated pension corpus to be utilized for purchasing annuity that would provide a regular pension. The remaining funds can be withdrawn as lump sum. This is applicable if the corpus is more than Rs.2.50 lacs.
b) Be a NPS subscriber for 10 years. c) If the total corpus is less than or equal to Rs. 2.50 lakh, Subscriber can opt for 100% lump sum withdrawal.

C. Death :

The entire accumulated pension corpus (100%) would be paid to the nominee/legal heir of the subscriber.

D. Partial Withdrawals :

Up to 25% of the contribution amount deposited can be withdrawn for certain specified conditions such as purchase/construction of a new house, critical illnesses, marriage of child etc.

For Subscribers who join NPS beyond 60 years:

The exit before 3 years of NPS subscription shall be treated as 'premature exit' and those withdrawals beyond 3 years is the 'normal exit'. For premature exit, the permissible limit for lump sum is Rs.2.50 lakhs and Rs.5 lakhs under normal exit without the need for annuitization. In case of unfortunate death of those subscribers, the entire corpus shall be paid to the nominee/legal heirs.

Intermediary Charge Head Service Charges*
Charges by Bank - Point Of Presence - POP (Maximum Permissible Charge for each Subscription) Initial Subscriber Registration Minimum Rs. 200/- and upto Rs.400
Initial Contribution Upto 0.50% of initial contribution amount subject to a minimum of Rs.30/- and a maximum of Rs.25,000
Any subsequent Contribution
All Non Financial Transactions Rs.30/-
Charges by Bank - Point Of Presence - POP (Through cancellation of Units) Persistency Rs. 50/- per annum for annual contribution of Rs.1000 to Rs.2999.
Rs.75/- per annum for annual contribution of Rs.3000 to Rs.6000.
Rs.100/-per annum for annual contribution above Rs.6000
M/s NSDL e-Governance Infrastructure Ltd Permanent Retirement Account Number (PRAN) Opening Charges Rs.40/-
PRAN Annual Maintenance Charges Rs. 69/-
Charge per transaction Rs. 3.75/-
NPS Trust Reimbursement of Expenses 0.005% p.a. of total accumulated amount
Custodian Asset Servicing charges 0.0032% p.a for Electronic segment & Physical segment.
PF charges Investment Management Fee 0.03% to 0.09%(depending on the slabs of AUM managed by the Pension Fund.

Disclaimer for ESAF Small Finance Bank for white labeling NPS Link in the Bank website

“By clicking on this URL you will be exiting ESAF Small Finance Bank website and entering the website of "NSDL e-Governance Infrastructure Limited". This link is provided only for the convenience of the customers and ESAF Small Finance Bank shall not be liable for any disputes with respect to the said services provided by "NSDL e-Governance Infrastructure Limited" to customer. Participation by customer for registration of National Pension System (NPS) is purely voluntary. Thank you for visiting www.esafbank.com.”
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Disclaimer for ESAF Small Finance Bank for white labeling NPS Link in the Bank website

“By clicking on this URL you will be exiting ESAF Small Finance Bank website and entering the website of "NSDL e-Governance Infrastructure Limited". This link is provided only for the convenience of the customers and ESAF Small Finance Bank shall not be liable for any disputes with respect to the said services provided by "NSDL e-Governance Infrastructure Limited" to customer. Participation by customer for registration of National Pension System (NPS) is purely voluntary. Thank you for visiting www.esafbank.com.”
Back      Continue

Disclaimer for ESAF Small Finance Bank for white labeling NPS Link in the Bank website

“By clicking on this URL you will be exiting ESAF Small Finance Bank website and entering the website of "NSDL e-Governance Infrastructure Limited". This link is provided only for the convenience of the customers and ESAF Small Finance Bank shall not be liable for any disputes with respect to the said services provided by "NSDL e-Governance Infrastructure Limited" to customer. Participation by customer for registration of National Pension System (NPS) is purely voluntary. Thank you for visiting www.esafbank.com.”
Back      Continue

Disclaimer for ESAF Small Finance Bank for white labeling NPS Link in the Bank website

“By clicking on this URL you will be exiting ESAF Small Finance Bank website and entering the website of "NSDL e-Governance Infrastructure Limited". This link is provided only for the convenience of the customers and ESAF Small Finance Bank shall not be liable for any disputes with respect to the said services provided by "NSDL e-Governance Infrastructure Limited" to customer. Participation by customer for registration of National Pension System (NPS) is purely voluntary. Thank you for visiting www.esafbank.com.”
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