The Finance Ministry has permitted state-owned public sector companies to invest in debt-oriented schemes of all mutual funds regulated by the Securities and Exchange Board of India, said in an official memorandum.
The provisions so far limit public sector companies’ investment in public sector mutual funds, in which the government holds 50 per cent stake. The permission given by the Finance Ministry to private sector mutual funds to invest in bond-linked schemes will also help in diversifying their investment portfolio.
It added that, ‘The maturity period of any investment instrument should not exceed one year from the date of investment in case of Fixed Deposit. In the case of banks and government securities, it can be extended up to 3 years.
The revised guidelines for investment of surplus funds by public sector companies issued by the Department of Investment and Public Asset Management states that ‘Maharatna, Navratna and Miniratna public sector companies invest. SEBI regulated mutual funds are permitted in bond based schemes.
The guidelines have been revised keeping in view the requests received from some public sector companies, mutual funds and private sector banks. These proposals were examined by an inter-ministerial committee. Thereafter this guideline was issued.
Investments in Maharatna, Navratna and Miniratna public sector companies will be allowed to invest in debt based schemes, which will be SEBI regulated mutual funds. However, these guidelines will not be applicable to government insurance companies and banks. It also prohibits engagement of any broker or agent, which cannot be prevented in any manner by either party.