Invest with PSBs, FM to tell PSUs

NEW DELHI: Finance minister P Chidambaram has called a meeting of CEOs of major public sector companies on Tuesday to discuss issues related to parking of their surplus funds with public sector banks (PSBs). The meeting is called after public sector undertakings (PSUs) did not pay attention to the finance ministry���s directive to deposit 60% of their surplus funds in PSBs. The ministry has also found that some of the PSUs were still inviting bids from banks offering best interest rates despite its direction against such a practice.

The timing of the meeting is significant as banks are facing liquidity crunch due to the global financial crisis. The meeting will also be attended by secretaries of PSUs��� administrative ministries. Finance ministry had issued a directive in January this year asking all the PSUs to park 60% of their funds with PSBs.

It is understood from government sources that the PSUs are reluctant to comply with the finance ministry���s guidelines as this would have resulted into a huge loss to them. Even as oil PSUs requested for an exemption, the finance ministry is unlikely to give any case-specific relaxation.

���The ministry is of the view that all PSUs and government departments should comply with the directive failing which government may be forced to take disciplinary action against the erring enterprises,��� an official in the finance ministry said.

He, however, clarified that the final decision in this regard would be taken by Mr Chidambaram after his meeting with the PSU chiefs and secretaries. Oil and Natural Gas Corporation (ONGC), Indian Oil Corporation (IOC), NTPC, Bhel and Steel Authority of India Ltd (SAIL) are among the PSUs that have been invited for the meeting.

Secretaries of ministry of heavy industry and public enterprises (HI&PE), ministry of power, ministry of petroleum and natural gas and ministry of steel are also expected to attend the meeting.

Assurance of bulk deposits would help the PSU banks in improving their capital risk profile or capital to risk weighted asset ratio (CRAR). The finance minister has decided to personally solve the issue after finding that several PSUs were not complying despite repeated repeated instruction from the government in this regard.