The Pension Fund Regulatory and Development Authority will remain the regulator for the pension fund business in India.

The finance ministry is likely to introduce a Bill in Parliament to provide statutory backing to the new regulator.

According to senior finance ministry sources, there was no plan to shift the pension fund regulation duties to the Insurance Regulatory and Development Authority.

The PFRDA will specify the foreign investment norms and eligibility criteria for prospective pension funds to operate in India, they said.

The sources said, in a recent pre-Budget meeting with mutual fund chiefs, Finance Minister P Chidambaram told them that they should apply to the PFRDA for a licence to set up pension fund business in India.

When a CEO of a private mutual fund complained that there were confusing signals relating to the status of PFRDA, the minister made it clear that neither he nor his ministry had ever stated that IRDA would oversee the pension funds business, mutual fund sources said.

The Centre had set up an Interim PFRDA through an executive order on December 31, 2003, and had made it mandatory for all government recruits from January 1, 2004 to be part of the new system which stipulated a defined monthly contribution of 10 per cent of the salary and dearness allowance.

The Centre will make a matching contribution and the contributions along with investment returns would be deposited in a non-withdrawable pension tier-I account.

While the Centre had initially stated that only six pension funds would be awarded licence to do business in India, it later clarified that any number of funds can apply for a licence subject to their fulfilling of the eligibility criteria as laid out by the regulator.