State-owned firms can now invest in funds
Govt approves the proposal to allow Navratna and Miniratna public sector companies to park up to 30 per cent of their investible surplus in mutual funds, reports Gaurav Choudhury.business Updated: Jul 27, 2007 01:27 IST
The cabinet committee on economic affairs (CCEA) on Thursday approved the proposal to allow Navratna and Miniratna public sector companies to park up to 30 per cent of their investible surplus in mutual funds. The move is likely inject an additional Rs 45,000 crore into mutual funds.
These companies, which include the likes of ONGC, NTPC, BSNL, Gail, Indian Oil Corporation and SAIL, are estimated to have around Rs 1,40,000 crore of investible reserves, which are mostly kept in gilts and fixed deposits till they are used for capital expenditure. However, these companies are now seeking greater freedom in the using these funds to earn more from their savings.
“The approval will provide Navratna and Miniratna public sector companies a level playing field with private sector entities, which can invest in mutual funds and provide flexibility to these companies to choose schemes based on relative performance of funds,” Information and Broadcasting Minister P.R. Dasmunshi told reporters after the cabinet meeting.
The move is expected to give a further boost to the stock market, which have reached an all-time high.