Govt considers allowing PSUs to park surplus funds in private sector MFs

Govt to allow PSUs to park surplus funds in MFs
With a view to offer some relaxation to PSUs in existing investment norms, the government is considering allowing the PSUs to park their surplus funds in private sector mutual funds (MFs).

At present, the PSUs are allowed to invest their funds only in public sector mutual funds.

"Now, the government wants to give some flexibility to PSUs and provide them level-playing field vis-a-vis private companies. Therefore, it has proposed that there should be certain limit for investing in public MFs and PSUs should be allowed to invest rest of their funds either with private or public sector mutual funds," an official said.

This proposal is a part of the report prepared by a panel of the Department of Public Enterprises (DPE), headed by Department of Economic Affairs Additional Secretary Shaktikanta Das.

The committee was formed by the government to review guidelines on investment of excess funds available with cash-rich PSUs.

"The DPE is in the process of preparing the note in this regard. After the inter-ministerial consultations will be over, the note will be sent to Cabinet Committee on Economic Affairs for its consideration," the official added.

Moreover, the panel also proposed that PSUs must be allowed to invite bids from banks to invest their surplus funds. As per existing norms, PSUs park their funds with whom they have regular business.

On May 13, the Prime Minister's Office (PMO) had asked central PSUs to either invest their excess funds or pay higher dividend, thereby deploying surplus funds to fuel growth and create employment.

Read more about: psu, mf
Story first published: Monday, June 17, 2013, 9:40 [IST]
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