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Insurance provider, Max Life Insurance, has secured licences for Pension Fund Management (PFM) and is shortly expected to commence operations. It is one of the three new firms including Axis Asset Management Company and Tata Asset Management Company to have secured such licences in the past year. The company currently provides annuities and is looking for licences for point of presence (NPS distribution). Prashant Tripathy, CEO, Max Life Insurance, speaks to Mint on the company’s plans around its pension fund business. Edited excerpts from an interview:

What is your broad strategy for NPS?

We have seen growth in NPS assets under management over the last five years at a CAGR of  37%, which is quite robust. Slowly, NPS is becoming more and more prominent in the total retirement funds market.

 As a life insurance company, Max Life already provides retirement solutions such as immediate or deferred annuities. However, it absolutely made sense for us to look at retirement as a market in a 360-degree manner. 

And with that belief, we have taken a licence from the pension fund regulator, PFRDA, to start a 100% subsidiary of Max Life Insurance called Max Life Pension Fund Management. 

In addition, we also have a licence to be an annuity service provider, or ASP. As an organization, we can also provide an annuity for other pension funds also. 

Axis Bank has historically distributed Max Life products and it is now your promoter as well. At the same time, Axis Mutual Fund has also secured a pension fund licence. So, how does that affect your distribution? 

I think both teams will work together and there will be synergies, of course. Their plan to start the PFM business and that of ours came at two different times. 

They had already applied for a licence before they became our parent organization, and we desire to run it parallelly. The market is large. We are already in talks with the Axis Bank team and we will absolutely create synergies. 

 Are there any reforms you would like to see, particularly in NPS. For example, more flexibility with investment, going into small caps — is this something that you think needs to happen in the next one or two years? 

Yeah, definitely. Looking at low credit bonds, taking more risks, and looking at alternate asset classes will definitely be a possibility, but those things will happen as the business matures. I’m very happy with the current level of flexibility already and, for a new organization like ours, this is good enough to start. But as time passes, I think, making the distribution more lucrative, creating ecosystem and frameworks around faster growth around distribution, easy empanelment of subscribers is needed. Those are things where we would definitely work with the regulator to see how best it could be expedited. 

How much do you intend to invest in this new venture? And, when are you likely to start operations? 

 It basically requires 50 crore. We have put about 55 crores to start with, and we believe that this is not going to be a hugely capital-intensive business and will be like any other entrepreneurial venture. 

We’re going to follow a bootstrap method and then look at how fast it is growing. But our company is very large, and capital will not be constraint if the business starts to grow. 

As to the question on our starting operations, we are almost there. My sense is that, early second quarter is when we should be able to start our operations. 

So, we have licenses in place. We have got all the approvals from the management. And, we’re just going to begin. 

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