Govt mulling restrictions on cash-surplus investments of PSUs

NEW DELHI: The government is contemplating tightening norms for use of surplus funds by cash-rich PSUs by restricting their investments to debt schemes of mutual funds with a minimum corpus of Rs 1,000 crore.

"Besides, CPSEs would have another option to park their funds in term deposits with any scheduled commercial bank and with a net worth of Rs 500 crore," an official told.

Currently, this limit for commercial banks is Rs 100 crore.

The present guidelines do not specify any corpus size of mutual fund company for investments by PSUs.

A committee of the Department of Public Enterprises (DPE) headed by Shaktikanta Das, additional secretary in the Department of Economic Affairs, has held many meetings to discuss various options available with regard to investments by Central Public Sector Enterprises (CPSEs).

The panel is in the process of rationalising and consolidating the existing investment norms for CPSEs, the official said.

"Under the new guidelines, the government is expected to offer a number of options like mutual funds, term deposits, treasury bills and government securities to CPSEs for investing their surplus funds," the official added.

Cash-rich PSUs like GAIL, Coal India and ONGC would be allowed to invest in mutual funds debt scheme with a corpus amounting to at least Rs 1,000 crore for the scheme, he added.

At present, there are various norms issued by the DPE on investment of excess funds available with such PSUs.

In a meeting convened by Prime Minister Manmohan Singh, on October 23, he had asked 25 cash-rich central PSUs to invest their surplus fund of Rs 2.5 lakh crore to accelerate economic growth.

The meeting was attended by Finance Minister P Chidambaram and Planning Commission Deputy Chairman Montek Singh Ahluwalia besides heads of 25 PSUs, including ONGC, Coal India, BHEL, NTPC, SAIL, NMDC.

Heavy Industries and Public Enterprises Minister Praful Patel had said : "If the PSUs do not deploy the investible surpluses in their own growth and expansion, that money should not lie idle and it must be paid back to the government by way of special dividend".

Besides, he had said the government would form a committee of secretaries, to be headed by Cabinet Secretary Ajit Kumar Seth, to look into the issues of PSUs regarding like autonomy, regulatory clearances and investment of surplus funds, among other things.