Govt allows CPSEs to park surplus funds in debt schemes of private sector MFs

Besides mutual funds, the guidelines permit CPSEs to invest in Treasury bills and G-Secs, term deposits in commercial banks, certificate of deposit or commercial papers issued by banks.

PTIUpdated: Wednesday, December 07, 2022, 06:34 PM IST
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The finance ministry on Wednesday permitted CPSEs to invest their surplus funds in debt-based schemes of private sector mutual funds, a move that will help them diversify their investment portfolio.

So far, Central Public Sector Enterprises (CPSEs) were allowed to invest their surplus fund in Sebi-regulated public sector mutual funds.

The Department of Investment and Public Asset Management (DIPAM) has issued a modified guidelines on investment of surplus funds by CPSEs wherein it said that "Maharatna, Navratna and Miniratna CPSEs are permitted to invest in debt-based schemes of Sebi regulated mutual funds".

DIPAM said the guidelines have been modified in view of the representations received from some CPSEs, mutual funds, and private sector banks suggesting changes in certain provisions keeping in view liberalisation of policies and introduction of new monetary instruments for trade in short-term funds.

These proposals have been examined by the inter-ministerial Committee for Monitoring of Capital Management and Dividend in CPSEs (CMCDC) which currently considers all capital restructuring matters of CPSEs.

Surplus funds refer to funds available with CPSEs after meeting the business requirements, including operating expenses, tax payment, working capital, debt servicing and capital expenditure.

Permit to invest in Treasury bills and G-secs

Besides mutual funds, the guidelines permit CPSEs to invest in Treasury bills and G-Secs, term deposits in commercial banks, certificate of deposit or commercial papers issued by banks.

The original guidelines on investment of surplus funds by CPSEs were issued by the Department of Public Enterprises in May 2017. It deals with management of surplus funds to prevent it from lying idle and instead generate returns.

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