Investment Guidelines for Government Sector – UPS/NPS/APY Schemes- Central/ State Government (default), Corporate CG, NPS Lite, Atal Pension Yojana and APY Fund Scheme – PFRDA Master Circular dated 10.12.2025

INDEX

Government Securities and Related Investments:

(a)  Government Securities,

(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 and also includes fresh issuance of “Govt. of India- Fully Serviced Bonds” issued by Public Sector Undertakings under Extra Budgetary Resources (EBR) after 3rd Jun 2020.

Provided that the portfolio invested under this sub-category of securities shall not exceed 10% of the total Govt. Securities portfolio in the concerned Scheme at any point of time.

(c)  Units of Mutual Funds set up as dedicated funds for investment in Govt. securities and regulated by the SEBI.

Provided that the portfolio invested in such mutual funds shall not exceed 5% of the total Govt. Securities portfolio in the concerned Scheme at any point of time.

Debt Instruments and Related Investments:

(a) Listed (or proposed to be listed in case of fresh issue) debt securities issued by bodies corporate, including banks and public financial institutions (Public Financial Institutions as defined under Section 2 of the Companies Act, 2013).

(b) Listed (or proposed to be listed in case of initial offering) Basel III Tier-1 bonds issued by scheduled commercial banks, AIFIs and Govt owned NBFCs under RBI Guidelines.

Provided that the portfolio invested in this sub-category shall not exceed 2% of the concerned Scheme AUM at any point of time.

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 across all schemes managed by the Pension Fund shall not exceed 20% of such Tier I Bonds issued by that Bank.

(c) Rupee Bonds issued by institutions of the International Bank for Reconstruction and Development, International Finance Corporation and Asian Development Bank.

(d) Term Deposit receipts of more than one year duration issued by scheduled commercial banks, which meets the regulatory requirement of Net worth and Capital to Risk Weighted Asset Ratio as stipulated by Reserve Bank of India and additionally 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 the law:

(i) having declared profit in the immediately preceding three financial years;

(ii) having net non-performing assets of not more than 4% of the net advances;

Provided that such Term Deposits with any one scheduled commercial bank including its subsidiaries should not exceed 10% of the concerned Scheme AUM at any point of time.

(e) Units of Debt Schemes of Mutual Funds as regulated by SEBI.

Provided these schemes shall exclude schemes of mutual funds having investment in short term debt securities with Macaulay Duration of less than 1 year.

Provided further that the portfolio invested in such mutual funds shall not exceed 5% of the total debt instruments portfolio in the concerned scheme at any point of time.

(f) Debt securities issued by Real Estate Investment Trusts (REIT) regulated by the SEBI.

(g) Debt securities issued by Infrastructure Investment Trusts (InVIT) regulated by the SEBI.

(h) The following infrastructure related debt instruments:

(i) Listed (or proposed to be listed in case of fresh issue) debt securities issued by body corporates engaged mainly in the business of development or operation and maintenance of infrastructure, or development, construction or finance of affordable housing.

Further, this category shall also include securities issued by Indian Railways or any of the body corporates in which it has majority shareholding.

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 category (ii)(d) above.

(iii) Listed (or proposed to be listed in case of fresh issue) securities issued by Infrastructure Debt Funds operating as a NBFC 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 SEBI.

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

(i) Listed or proposed to be listed credit rated Municipal bonds.

(j) Investment in units of Debt ETFs issued by Government of India specifically meant to invest in bonds issued by Government owned entities such as CPSEs, CPSUs/CPFIs and other Government organizations, etc.

Provided that the portfolio invested in such Debt ETFs shall not exceed 5% of total debt instruments portfolio in the concerned scheme at any point of time.

Provided that the investment under sub-categories (a), (b) and (h) (i) to (iv) of this category (ii) shall be made in such securities with at least AA rating or equivalent in the applicable rating scale from at least two credit rating agencies registered with SEBI. However, Pension Fund can invest up to 10% of the total debt instruments portfolio in such securities with AA rating or above in the applicable rating scale that are rated by a single rated agency registered with SEBI.

Provided further that in case of the sub-category (h)(iii) the ratings shall relate to the NBFC and for the sub-category (h)(iv) the ratings shall relate to the investment in eligible securities of the Infrastructure Debt Fund.

Provided further that under sub-category (h), Pension Fund can make investment in infrastructure companies rated not less than ‘A’ along with an Expected Loss Rating of ‘EL1’

Further though investments under this category (ii) require at least AA rating as specified above, Pension Fund can invest in securities having investment grade rating below ‘AA’, provided that, investments in securities rated from ‘AA-’ to ‘A’ shall not exceed 10% of the total debt instruments portfolio in the concerned scheme while making such investment. Any investments in securities rated below ‘AA’ in excess of 10% of the total debt instruments portfolio in the concerned scheme, the risk of default for such securities shall be fully covered with Credit Default Swaps (CDSs) issued under Guidelines of the RBI and purchased along with the underlying securities. Purchase amount of such Swaps shall be considered to be investment made under this category.

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.

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

For sub-category (a) and (c), the investments made in debt securities and Rupee Bonds with residual maturity period of less than three years on the date of investment shall be limited to 10% of the investments made in debt instruments portfolio during the preceding 12 months in the concerned Scheme.

In case of securities where the principal is to be repaid in a single pay-out, the maturity of the securities shall mean residual maturity. In case the principal is to be repaid in more than one pay-out, then the maturity of the securities shall be calculated on the basis of weighted average maturity of the security.

For sub-category (f) and (g), the Trust should be rated as ‘AAA’ or equivalent in the applicable rating scale by at least two credit rating agencies registered with SEBI.

For sub-category (i), the Municipal Bonds should be rated ‘AAA’ or equivalent in the applicable rating scale by at least two credit rating agencies registered with SEBI.

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

Short-term Debt Instruments and Related Investments:

(a) Money market instruments comprising of Treasury Bills, Commercial Paper and Certificates of
Deposit

Provided that investment in Commercial Paper issued by body corporates shall be made only in such instruments which have minimum rating of A1+ by at least two credit rating agencies registered with the SEBI.

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) 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.

(c) Investments in units of a debt scheme of a mutual fund as regulated by SEBI where investment is in short term securities with Macaulay duration of less than 1 year viz. Overnight fund, Liquid Fund, Ultra Short Duration Fund and Low Duration Fund with the condition that the average total asset under management of AMC for the most recent six-month period should be at least Rs 5000 crore.

(d) Investments in Government Securities as Lender in Triparty Repo conducted over the Triparty Repo (Dealing) System (TREPS) provided by RBI through Clearing Corporation of India Limited (CCIL).

Equities and Related Investments:

(a)  Stocks which are constituents of NIFTY 250 Index are eligible for investments. However, constituent stocks of BSE 250 Index which are not part of NIFTY 250 Index are also eligible for investments.

Provided that 90% of the Asset Class / Scheme AUM shall be invested only in to the top 200 stocks of NIFTY 250 Index with flexibility to invest up to 10% in the remaining eligible stocks.

(b)  Units of equity schemes of mutual funds regulated by the SEBI, which have minimum 65% of their investment in shares of body corporates listed on BSE or NSE Provided that investment in such mutual funds shall not exceed 5% of the total equity portfolio in the concerned scheme at any point of time and the fresh investment in such mutual funds shall not exceed 5% of the fresh inflows invested in the year.

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

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

(e)  Exchange Traded Derivatives regulated by SEBI
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 exceed 5% of the total equity portfolio in the concerned scheme at any point of time.

(f)  Initial Public Offering (IPO), Follow on Public Offer (FPO) and Offer for Sale (OFS) of companies, approved by SEBI.

(a) Commercial mortgage-based securities (CMBS) or Residential mortgage-based securities (RMBS).

(b) Units issued by Real Estate Investment Trusts (REITs) regulated by the SEBI.

(c) Asset Backed Securities (ABS) regulated by the SEBI.

(d) Units of Infrastructure Investment Trusts (InvITs) regulated by the SEBI.

(e) Investment in SEBI Regulated ‘Alternative Investment Funds’ (Category I and Category II only).

Investments in sub-category (e) (i.e. AIF – Cat. I and Cat. II) is allowed subject to: –

(i)   The permitted funds under category I are Start-up Funds, Infrastructure Funds, SME Funds, Venture Capital Funds and Social Venture Capital Funds as detailed in Alternative Investment Funds Regulations, 2012 by SEBI.

(ii) For category II AIF as per Alternative Investment Funds Regulations, 2012 by SEBI, at least 51% of the funds of such AIF shall be invested in either of the Start-up entities, infrastructure entities or SMEs or venture capital or social welfare entities.

(iii) Pension Fund shall invest only in those AIFs whose corpus is equal to or more than Rs.100 crore.

(iv) The exposure to single AIF shall not exceed 10% of the AIF size.

(v) Pension Funds to ensure that funds should not be invested in securities of the companies or Funds incorporated and operated outside the India in violation of Section 25 of the PFRDA Act 2013.

(vi) The sponsors of the Alternative investment funds should not be the promoter in Pension Fund or the promoter group of the Pension Fund.

(vii) The AIFs shall not be managed by Investment manager, who is
directly or indirectly controlled or managed by Pension Fund or the
promoter group of the Pension Fund.

(f) Units issued by Gold and silver ETF regulated by SEBI

Provided that the aggregate investment under sub-category (e) in such AIFs for Govt Sector shall not exceed the 1% of the respective Scheme AUM managed by the Pension Fund.

Provided that the aggregate investment under sub-category (f) shall not exceed the 1% of the respective Scheme AUM managed by the Pension Fund.

Provided that investment under this category (v) shall only be in listed instruments or fresh issues that are proposed to be listed except in case of sub-category (e) above.

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 SEBI.

Provided further that in case of the sub-categories (b) and (d), the Trust should have minimum rating of ‘AAA’ or equivalent rating in the applicable rating scale from at least two credit rating agencies registered by SEBI.

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.