Select PSUs Can Now Invest In Equity Mutual Funds

Up to 30% of surplus funds can be parked in public sector MFs . Decks have been cleared for sizeable flow of public sector surplus funds into the capital market. Public sector blue-chip companies enjoying navratna and miniratna status can now park up to 30% of their surplus funds in equity mutual funds. However, the investments would be allowed only in public sector mutual funds.
The Cabinet Committee on Economic Affairs (CCEA) on 26 July 2007 gave its nod for removing the prohibition on investment of surplus funds of navratnas and miniratnas in equity mutual funds. Currently, blue-chip PSU companies are parking their surplus funds in fixed deposits of nationalised banks, RBI bonds and treasury bills. Total surplus of central PSUs in 2005-06 was estimated at Rs 2,39,535 crore, according to public enterprises survey. Bulk of this surplus is accounted for by navratnas and miniratnas. There are currently 12 navratnas and 54 miniratnas. In May this year, the CCEA had referred the issue of allowing state-owned companies with surplus cash reserves to invest in mutual funds to a committee of secretaries.