Investment Guidelines for NPS Schemes (Other than Govt. Sector (CG &SG), Corporate CGI NPS Lite and APY) w.e.f. 10th September, 2015

(b) Other Securities { ‘Securities’ as defined in section 2(h) of the
Securities Contracts (Regulation) Act, 1956} the principal
whereof and interest whereon is fully and unconditionally
guaranteed by the Central Government or any State
Government.
The portfolio invested under this sub-category of securities shall
not be in excess of 10% of the total portfolio of the G-Sec in the
concerned NPS Scheme of the pension fund at any point of time.

(c) Units of Mutual Funds set up as dedicated funds for
investment in Govt. securities and regulated by the Securities
and Exchange Board of India:

Provided that the portfolio invested in such mutual funds shall not
be more than 5% of the of the G-Sec in the concerned NPS
Scheme of the pension fund at any point of time and fresh
investments made in them shall not exceed 5% of the fresh
accretions in the year.

(b) Basel III Tier-1 bonds issued by scheduled commercial banks
under RBI Guidelines:

Provided that in case of initial offering Of the bonds the investment
shall be made only in such Tier-I bonds which are proposed to be
listed.

Provided further that investment shall be made in such bonds of a scheduled
commercial bank from the secondary market only if
such Tier I bonds are listed.

Total portfolio invested in this sub-category, at any time, shall not
be more than 2% of the total portfolio of the fund.

No investment in this sub-category in initial offerings shall exceed
20% of the initial offering. Further, at any point of time, the
aggregate value of Tier I bonds of any particular bank held by the
fund shall not exceed 20% of such bonds issued by that Bank

(c) Rupee Bonds having an outstanding maturity of at least 3
years issued by institutions of the International Bank for
Reconstruction and Development, International Finance
Corporation and Asian Development Bank.

(d) Term Deposit receipts of not less than one year duration
issued by scheduled commercial banks, which satisfy the
following conditions on the basis of published annual report(s)
for the most recent years, as required to have been published
by them under law:

(f) The following infrastructure related debt instruments:

This category shall also include securities issued by any Authority
of the Government which is not a body corporate and has been
formed mainly with the purpose of promoting development of
infrastructure.

It is further clarified that any structural obligation undertaken or
letter of comfort issued by the Central Government, Indian
Railways or any Authority of the Central Government, for any
security issued by a body corporate engaged in the business of
infrastructure, which notwithstanding the terms in the letter of
comfort or the obligation undertaken, fails to enable its inclusion
as security covered under category (i) (b) above, shall be treated as
an eligible security under this sub-category.

(ii) Infrastructure and affordable housing Bonds issued by any
scheduled commercial bank, which meets the conditions
specified in (ii)(d) above.

(iii) Listed (or proposed to be listed in case of fresh issue)
securities issued by Infrastructure debt funds operating as a Non-Banking Financial Company and regulated by Reserve Bank of
India.

(iv) Listed (or proposed to be listed in case of fresh issue) units
issued by Infrastructure Debt Funds operating as a Mutual
Fund and regulated by Securities and Exchange Board of
India.

It is clarified that, barring exceptions mentioned above, for the
purpose of this sub-category (f), a sector shall be treated as part
of infrastructure as per Government of India’s harmonized master-list of infrastructure sub-sectors:

(g) Listed and proposed to be listed Credit Rated Municipal
Bonds

Provided that the investment under sub-categories (a), (b), (f) (i) to
(iv) and (g) of this category No. (ii) shall be made only in such
securities which have minimum AA rating or equivalent in the
applicable rating scale from at least two credit rating agencies
registered with Securities and Exchange Board of India under
Securities and Exchange Board of India (Credit Rating Agency)
Regulation, 1999. Provided further that in case of the sub-category
(f) (iii) the ratings shall relate to the Non-Banking Financial
Company and for the subcategory (f) (iv) the ratings shall relate to
the investment in eligible securities rated above investment grade
of the scheme of the fund.

Provided further that if the securities/entities have been rated by
more than two rating agencies, the two lowest of all the ratings
shall be considered.

Provided further that investments under this category requiring a
minimum AA rating, as specified above, shall be permissible in
securities having investment grade rating below AA in case the
risk of default for such securities is fully covered with Credit
Default Swaps (0088) issued under Guidelines of the Reserve
Bank of India and purchased along with the underlying securities.
Purchase amount of such Swaps shall be considered to be
investment made under this category.

For sub-category (c), a single rating of AA or above by a domestic
or international rating agency will be acceptable.

It is clarified that debt securities covered under category (i) (b)
above are excluded from this category (ii).

Miscellaneous Investments (Up to 5%)

(a) Commercial mortgage based Securities or Residential
mortgage based securities.

(b) Units issued by Real Estate Investment Trusts regulated by
the Securities and Exchange Board of India.

(c) Asset Backed Securities regulated by the Securities and
Exchange Board of India.

(d) Units of Infrastructure Investment Trusts regulated by the
Securities and Exchange Board of India.

Provided that investment under this category shall only be in
listed instruments or fresh issues that are proposed to be listed.

Provided further that investment under this category shall be
made only in such securities which have minimum AA or
equivalent rating in the applicable rating scale from at least
two credit rating agencies registered by the Securities and
Exchange Board of India under Securities and Exchange Board
of India (Credit Rating Agency) Regulations, 1999. Provided
further that in case of the sub-categories (b) and (d) the ratings
shall relate to the rating of the sponsor entity floating the trust.

Provided further that if the securities/entities have been rated by
more than two rating agencies, the two lowest of the ratings shall
be considered.

Shares of body corporates listed on Bombay Stock Exchange (BSE) or National Stock Exchange (NSE), which have:

(i) Market capitalization of not less than Rs. 5000 crore as on the
date of investment; and
(ii) Derivatives with the shares as underlying traded in either of
the two stock exchanges.

(b) Units of mutual funds regulated by the Securities and Exchange
Board of India, which have minimum 65% of their investment in
shares of body, corporates listed on BSE or NSE.

(c) Exchange Traded Funds (ETFs)/lndex Funds regulated by
the Securities and Exchange Board of India that replicate the
portfolio of either BSE Sensex Index or NSE Nifty 50 Index.

(d) ETFs issued by SEBI regulated Mutual Funds constructed
specifically for disinvestment of shareholding of the Government
of India in body corporates.

(e) Exchange traded derivatives regulated by the Securities and
Exchange Board of India having the underlying of any
permissible listed stock or any of the permissible indices, with the
sole purpose of hedging.

Provided that the portfolio invested in derivatives in terms of
contract value shall not be in excess of 5% of the total portfolio
invested in sub-categories (a) to (d) above.

Provided that investment in commercial paper issued by body
corporates shall be made only in such instruments which have
minimum rating of A 1 + by at least two credit rating agencies
registered with the Securities and Exchange Board of India.

Provided further that if commercial paper has been rated by more
than two rating agencies, the two lowest of the ratings shall be considered.

Provided further that investment in this sub-category in Certificates
of Deposit of up to one year duration issued by scheduled
commercial banks, will require the bank to satisfy all conditions
mentioned in category (ii) (d) above.

(b) Units of liquid mutual funds regulated by the Securities and
Exchange Board of India with the condition that the average
total asset under management of AMC for the most recent six
month period of atleast Rs. 5000/- crores

Term Deposit Receipts of up to one year duration issued by
such scheduled commercial banks which satisfy all conditions
mentioned in category (ii) (d) above