New Delhi: The Union cabinet has permitted 54 most successful public sector enterprises (PSUs) in the country to invest up to 30% of their “surplus funds” in equity mutual funds, as a step towards giving them greater flexibility in managing their money.
The cabinet committee on economic affairs decided on Thursday that the relaxation will apply to PSUs classified as Navratnas and Mini Ratnas—profit-making companies where the board is empowered to take decisions on capital expenditure below a specific threshold without prior approval from the government.
The approval will be in effect for a year, after which a review will be carried out. The quantum of money this would translate into isn’t immediately known. The government has, however, specified that this surplus cash may only be invested in public sector-run equity mutual fund schemes.
“The approval will provide the designated PSUs with a level playing field with private sector entities who can invest in mutual funds,” said Priya Ranjan Dasmunsi, the information and broadcasting minister, while announcing the decision.
A finance ministry official, who asked that he not be identified, clarified that any money not earmarked by a PSU for a particular purpose or not required for immediate operations of the company will qualify as “surplus”.
“It is doubtful how much money will come in as there is no assured return. Every board will have to take a call,” said Arun Kaul, general manager, treasury and finance, Punjab National Bank.
In another development, the government has decided to table a “white paper” on disinvestment in Parliament during the monsoon session scheduled to last from 10 August to 14 September.
“The white paper does not imply that the United Progressive Alliance government has changed its stance on disinvestment. It is being laid because the standing committee on finance has asked for it,” Dasmunsi told reporters.