Inter-ministerial meet on fund for CPSEs tomorrow

NEW DELHI: Moving ahead with its proposal to attract investors by setting up an Exchange Traded Fund for central public sector enterprises (CPSEs), the Disinvestment Department has called the meeting of an inter-ministerial panel tomorrow to firm up the structure of the scheme.

"An IMG will meet on September 3, for guiding the process for creation of a CPSEs' ETF," an official told reporters.

The Department of Disinvestment (DoD) has already constituted an IMG headed by its Secretary Mohammad Haleem Khan for setting up the fund, the official privy to the information said.

The ETF, which is an investment fund traded on stock exchanges much like stocks, would have an underlying benchmark that could be an index on the stock exchange.

The seven-member IMG has drawn members from the Ministry of Corporate Affairs, besides Departments of Legal Affairs and Economic Affairs among others.

"The group would appoint an advisor to assist and advise the government in the process. Besides, it would appoint an Asset Management Company to act as the ETF provider for the proposed fund," the official said.

As an instrument for trading in stock market, the fund was introduced in India in 2001. Presently, there are 33 ETFs having a total asset under management (AUM) of Rs 10,850 crore, which is held by over 4 lakh investors.

The official said the usual mode of taking a partial disinvestment offering of a CPSE to the market include initial/further public offering, through stock exchange and institutional placement programme.

"The proposed ETF for CPSEs will serve as an additional mechanism for the government to monetise its shareholding in those companies that will eventually form part of the ETF basket," he added.

The ETF was introduced in India on the lines of similar instruments in the US, Europe and Latin America.