The Department of Public Enterprises has reminded the Central Public Sector Enterprises that they can invest their surplus money only in mutual funds, where the collective holding of government and its institutions exceed 50%.
"Public Sector Mutual Funds mean MFs registered with and regulated by SEBI where the Government of India, its financial institutions and public sector banks hold individually or collectively more than 50% of shares in the Asset Management Company running the funds," a communication from the DPE to CEOs of Navratna and mini-Navratna CPSEs has said.
The government had allowed CPSEs in August 2007, to invest their surplus cash in the mutual funds owned by the public sector AMCs. However, the department was approached by the CPSEs to clarify as to what would be the exact definition of a public sector mutual fund. The total surplus of CPSEs in 2005-06 was estimated at Rs 2,39,535 crore (Rs 2395.35 billion). Navratna and mini-Navratna CPSEs accounted for bulk of this money.
Official sources now said that the confusion has been cleared over the definition of public sector MF and the CPSEs sitting on big cash can take advantage of the boom in the stock market to maximise returns.
