AMC for PSUs? Yes, but not another company

NEW DELHI: The government is planning to go ahead with the asset management company (AMC) for public sector companies as proposed by finance minister Jaswant Singh in July. However, it may not involve creation of a new company. The government may instead ask a financial institution to function as an AMC.
AMC may be entrusted with only certain niche functions such as tracking the value of the PSU shares in the stockmarket and determining the timing for offloading residual holding in privatised PSUs.
The sale of shares would be governed by the contract signed by the government and the strategic buyer, government sources said.
The exact role of the AMC is still being worked out, sources said, add-ing that a concrete proposal would be taken to the Cabinet by the end of the month. For the moment it appears that AMC is likely to be warehouse for shares held by the government in privatised PSUs, and not for holdings in all PSU.
At the first meeting between officials of finance ministry and disin-vestment ministry here today to discuss the role for an AMC, the offi-cials felt the body — what form or structure it takes — should not in anyway undermine the role of the disinvestment ministry.
“AMC may be given some niche functions so that the existing structure (disinvestment ministry) which was functioning efficiently is not affected,� sources said.
AMC could be given such role that it would add value to the function-ing of the disinvestment ministry, sources added.
While both ministries agreed that an AMC for PSUs shares was a good concept, the government would have to ensure that the creation of an entity would not lead to increase in government expenditure.
It was therefore suggested that a financial institution could be entrusted with the task of performing the role of an AMC.