ESAF Small Finance Bank NPS

What is ESAF Small Finance Bank NPS?

Under the National Pension Scheme, the subscribers make regular contributions in their productive years to form a retirement corpus, which is dependent on the market performance. ESAF Small Finance Bank is an authorised Point of Presence through which the account can be opened and managed. The accumulated sum increases as time passes, depending on contributions, preferred investments, or market fluctuations. Subscribers are allowed to draw a part of the corpus at exit or retirement, and the remainder is invested in an annuity that generates a pension.

The scheme is governed by the Pension Fund Regulatory and Development Authority, and was made available to employees of the Central Government in 2004, and made as open as possible to all citizens in 2009. It can be used by resident Indians and NRIs between the ages of 18 to 70 years, under the KYC requirements, and can be used as an individual pension account.

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18 Years 59 Years

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60%

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Types of ESAF Small Finance Bank NPS Accounts

Opening an NPS by ESAF Small Finance Bank gives each subscriber a Permanent Retirement Account Number (PRAN). There are two types of accounts under this single PRAN, which are Tier I and Tier II.

• Tier I Account

It is the primary retirement savings account, and it serves as a personal pension account. Contributions are mostly invested till retirement under specified NPS withdrawal regulations. Investments made to this account are only eligible to receive tax benefits under the Income Tax Act.

• Tier II Account

It is a voluntary account and offers more flexibility. There are no restrictions on exit, and funds can be withdrawn at any time. The opening of this account needs an active Tier I account since it works only in conjunction with the primary retirement account.

Operational requirements

This structure allows you to keep your retirement savings disciplined in Tier I while using Tier II for flexible short-term investing.

Features of ESAF Small Finance Bank NPS

National Pension Scheme offered by ESAF Small Finance Bank functions based on the Pension Fund Regulatory and Development Authority (PFRDA) guidelines and comes with the following provisions:

• Portability across Employment and Location: The NPS account remains open without having to open a new account in case of a shift in jobs, sector, or location.>
• Multiple Contribution Options and Service Requests: Customers are allowed to make contributions and request services via branches of ESAF small finance banks or through authorised digital platforms under the provisions of NPS standards.>
• Partial Withdrawal Facility: The subscriber can withdraw up to 25 percent of his own contributions at the end of three years, to specified purposes. There is a limit of three such withdrawals that can be made throughout the tenure of the account.>
• Centralised Grievance Redressal Mechanism: The complaints are handled using the Central Grievance Management System (CGMS), whereby the resolution time does not exceed 30 days.>
• Selection of Pension Fund and Investment Pattern: Subscribers are free to choose their preferred Pension Fund Manager and investment pattern.
• Auto Choice - Life Cycle Funds: The investment allocations automatically change depending on the age to achieve a balance between growth and stability during various phases of the working life of the subscriber.
• Life Cycle 75 - High (15E / 55Y): Equity of 75% to age 35, and then reducing to 15% at age 55 and above, with an aim of increasing early-stage retirement wealth generation.
• Life Cycle 50 - Moderate (10E / 55Y): The maximum percentage of equity allocation is 50% at the age of 35, then reduces to 10% at 55 years and above, aimed towards balancing growth and capital protection.
• Life Cycle 25 - Low (5E / 55Y): Equity exposure up to 25% at age 35, with a decline of 10% at 55 years of age and above, appropriate to a conservative retiree.
• Life Cycle - Aggressive (35E / 55Y): Equity allocation of up to 50% at the age of 45, and then reducing to 35% at the age of 55 and above, is designed to suit investors who want to have a long-term exposure to growth assets.

Applicable Charges Under ESAF Small Finance Bank NPS

Charges applicable to NPS services offered by ESAF Small Finance Bank as a Points of Presence (PoP) are as follows, in line with PFRDA guidelines:

Documents Required to Open an ESAF Small Finance Bank NPS Account

Applicants are required to submit a completed Subscriber Registration Form (online or physical) along with the following documents:

• One recent passport-size photograph
• PAN card
• Proof of address
• Proof of bank account (savings account for residents; NRE or NRO account for NRIs and OCIs)
• Identity document: Indian passport (for NRIs) or OCI card (for OCIs)

How to Open an ESAF Small Finance Bank NPS Account?

An ESAF Small Finance Bank NPS account can be opened through both online and offline modes.

Online Process

The online mode enables subscribers to open an NPS account through ESAF Small Finance Bank's digital platform.

• Login to NetBanking: Access ESAF Small Finance Bank NetBanking using your credentials
• Select NPS Registration: Navigate to the National Pension Scheme section and choose New Registration
• Complete KYC Verification: Finish PAN-based KYC authentication
• Provide Account Details: Enter personal information, nominee details, and bank account details
• Make Initial Contribution: Pay the minimum required amount online
• PRAN Generation: PRAN is generated after a successful submission

Offline Process

The offline mode enables subscribers to open an NPS account through visiting an ESAF Small Finance Bank.

• Visit the Bank Branch: Go to the nearest ESAF Small Finance Bank branch
• Collect Application Form: Obtain and fill out the Subscriber Registration Form (CSRF/NRSF)
• Submit KYC Documents: Provide required documents and recent photographs
• Select Investment Options: Investment Pattern, Pension Fund Manager, and Pension Contribution.
• Make First Contribution: Place an initial deposit in the form of cash, cheque or transfer of account.
• PRAN Issuance: The issuance of PRAN is done once documents are verified and processed.

Withdrawal Rules for ESAF Small Finance Bank NPS Account

Withdrawal rules are governed by PFRDA regulations and vary by subscriber category.

Partial Withdrawal (Tier I – All Subscribers)

• Allowed after completion of 3 years
• A maximum of 25% of subscribers' own contributions
• Permitted for specified purposes such as education, marriage, housing, medical treatment, or loan repayment
• Limited number of withdrawals during the tenure

Exit Before Age 60

Government Subscribers

• Up to 20% as lump sum
• Minimum 80% for annuity
• Full withdrawal allowed if corpus is ₹5 lakh or less

Non-Government Subscribers

• Up to 20% as lump sum
• The remaining 80% for annuity
• Full withdrawal allowed if corpus is ₹5 lakh or less

Exit at Age 60 or on Superannuation

Government Subscribers

• A minimum of 40% must be used to purchase an annuity
• If the total corpus is ₹8 lakh or less, full lump-sum withdrawal is permitted
• For a corpus between ₹8 lakh and ₹12 lakh, structured withdrawal options are available as per requirement

Non-Government Subscribers

• Lump-sum withdrawal is allowed up to 80% of the total accumulated corpus
• At least 20% of the amount must be allocated for annuity purchase
• Full withdrawal is permitted if the total corpus is ₹8 lakh or less
• The 80:20 withdrawal structure is mandatory when the corpus exceeds ₹12 lakh

Joining NPS at or After Age 60 (Non-Government Subscribers)

• Up to 80% of the accumulated corpus can be withdrawn as a lump sum at exit
• The remaining 20% must be used to purchase an annuity
• If the total corpus is ₹12 lakh or less, 100% lump-sum withdrawal is allowed

On the Subscriber's Death

Government and Non-Government Subscribers

• The entire accumulated pension corpus is paid to the nominee or legal heir
• There is no compulsory annuity requirement in case of death
• Nominees may choose between lump-sum payment or structured payouts as per PFRDA rules

Tax Implications on ESAF Small Finance Bank NPS

ESAF Small Finance Bank customers can avail of National Pension Scheme tax benefits on their contributions, subject to the applicable income tax rules.