The Cabinet Committee on Economic Affairs (CCEA) will discuss the proposal to lift the ban on state-owned companies from investing in mutual funds in its weekly meeting tomorrow.
This opens significant opportunities for cash-rich public sector units (PSUs) to earn higher returns and provide a fillip to the stock-markets. Mutual funds account for less than 1 per cent of total stock market investment.
According to data compiled by the Business Standard Research Bureau, the 78 listed public sector units had reserves worth Rs 3,04,292 crore at the end of March, 2006. Oil and Natural Gas Corporation (ONGC) with reserves of Rs 52,534 crore topped the list.
This is the second recent move by the government to strengthen PSUs. A month ago, it allowed the chairmen of such companies a role in the appointment of independent directors, also allowing them greater flexibility to make investment and operational decisions.
Read more in The Business Standard article.
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