NPS Bharat Fund of Funds (NB-FoF) is a dedicated Alternative Investment Fund (AIF) focused Fund of Funds established under the NPS framework to channel a portion of NPS assets (Pension Savings) into carefully selected Alternative Investment Funds in India.

It serves as an institutional investor in order to facilitate structured exposure of NPS assets to high-quality AIFs, while ensuring strong governance, risk management, and fiduciary discipline.

The FoF aims to:

• Enhance long-term subscriber returns
• Provide portfolio diversification through alternative assets
• Generate alpha through investment in well-managed AIFs
• Uphold the highest standards of governance, transparency, and fiduciary oversight.

Operationally:

1. The FoF functions as a centralized platform offering a single-window application process for eligible AIFs seeking investment, thereby streamlining access and evaluation.
2. The structure incorporates a centralized vetting and due diligence framework, while preserving the statutory investment responsibilities of the individual Pension Funds under the applicable regulatory framework.

NPS Bharat FoF Platform is a centralized Fund-of-Funds mechanism that acts as a single-window interface for onboarding, evaluating, investing, and post investment monitoring of eligible Alternative Investment Funds (AIFs) on behalf of NPS Trust, ensuring standardized due diligence, coordinated investments, and ongoing oversight

SEBI-registered Category I and Category II Alternate Investment Funds (AIFs) as per Pension Fund Regulatory Development Authority (PFRDA) investment guidelines

The NB-FoF is sector-agnostic.

Investments may span across sectors such as but not limited to:

• Financial services
• Deep tech
• Defence
• Pharmaceuticals
• Infrastructure
• MSME
• Manufacturing
• Digital economy
• Emerging sectors
• Consumer

The corpus of the NB–FoF is based on PFRDA-permitted limits for alternative investments under NPS.

As per extant PFRDA guidelines:

• • Up to 1% of AUM (Government Sector) may be allocated to alternative assets (including AIFs).
• • Up to 5% of Scheme E & C AUM (Non-Government Sector) may be invested in alternative assets (including AIFs).

The corpus of the NBV–FoF is based on PFRDA-permitted limits for alternative investments under NPS. Pension Funds may invest up to 5% of Scheme E & C AUM for the Non-Government Sector and up to 1% of AUM in AIFs for the Government Sector. The FoF corpus will be created within these limits based on actual allocations by participating Pension Funds.

Note: The regulatory ceiling also includes investment in Gold/Silver ETFs & REITs/InvITs.

AIFs with a target corpus of ₹100 Crore or more are eligible to apply for consideration under the FoF platform.

Eligible AIFs can only apply through the “Apply Now” Button on the FoF Platform. Only those AIFs who pass initial-assessment score can submit their application

No, as per Section 25 of the PFRDA Act, 2013, Alternative Investment Fund (AIF) cannot invest in securities of Companies or Funds incorporated and operated outside India

As per extant PFRDA guidelines:

• Up to 1% of AUM (Government Sector) may be allocated to alternative assets (including AIFs).
• Up to 5% of Scheme E & C AUM (Non-Government Sector) may be invested in alternative assets (including AIFs).

Note: The regulatory ceiling also includes investment Gold/Silver & REITs/InvITs

No, shortlisting does not guarantee capital commitment. It is a two-stage selection process. Shortlisting of AIFs by the screening committee is only the 1st stage. Final commitment depends on:

• Pension Fund Investment Committee’s Approval
• Regulatory Ceilings prescribed by PFRDA
• Commercial Negotiation outcomes

Registration → Self-Assessment → Submission of Application → Screening Committee → Pension Funds Investment Committee → Documentation → Onboarding of AIFs

The centralized AIF Cell under NPS Trust conducts primary due diligence, including but not limited to:

• Investment strategy evaluation
• Track record verification
• Governance review
• Risk assessment
• Legal and regulatory compliance
• Operational diligence

Individual Pension Funds may also conduct additional due diligence

Indicative timelines (subject to complexity):

• Initial screening: 2–4 weeks
• Detailed due diligence: 4–8 weeks
• Committee review & negotiations: 2–4 weeks

Total process may range from 8–16 weeks

AIFs shall be required to provide:

• SEBI registration certificate
• Private Placement Memorandum (PPM) and Investment Management (IM) Agreement
• Track Record (realized and unrealized performance)
• Details of Key Members such as Directors/Partners of the AIF.
• Organizational Structure
• Compliance certifications
• Valuation policy
• ESG Policy (if applicable)
• Risk management framework
• Litigation disclosure
• PMLA-related declarations

Please note that the list is not exhaustive.

Yes, strong GP skin-in-the game is expected to ensure alignment of interest.

Co-investments are not allowed as per the PFRDA investment guidelines.

Periodic reporting shall include but not limited to:

• Quarterly portfolio updates
• NAV statements
• Capital account statements
• Valuation reports
• ESG reporting (if applicable)
• Material event disclosures

Yes. The NVB-FoF platform may seek:

• LPAC representation
• Governance participation

AIFs are assessed on parameters including but not limited to:

• Strategy clarity
• Risk-return profile
• Team stability
• Track record consistency
• Portfolio construction discipline
• Exit history
• Governance strength
• Regulatory compliance

Key expectations from GPs include:

• Strict Institutional governance standards
• Regular & Transparent communication
• Timely Reporting
• Strong Alignment of interest
• Ethical conduct
• Long-term value creation focus

A conflict arises when:

• The Sponsor/GP’s personal, financial, or business interests interfere (or may appear to interfere) with fiduciary duties.
• Multiple funds managed by the GP compete for the same investment.
• Related parties transact with the AIF.
• Key personnel have undisclosed external interests.
• Incentive structures distort investment decisions