CCEA to discuss fund for loss-making PSUs to meet Sebi norms

The Cabinet is likely to consider a proposal to create a special fund that will buy shares of listed loss-making PSUs to make them compliant with the 10% minimum public holding norm of market regulator Sebi.

"The proposal for creation of the fund for share transfer from loss-making PSUs is scheduled to be discussed in the CCEA tomorrow," a source said.

The government has to lower its stake to 90% in seven loss-making public sector undertakings -- Scooters India, HMT, Andrew Yule, State Trading Corporation, ITI Ltd, Fertilisers and Chemicals Travancore and Hindustan Photofilms.

The government proposes to transfer its holdings in excess of 90% in these PSUs to the fund, which will hold the shares until the companies are revived or the shares are divested.

Market regulator Sebi has given its consent for the proposed fund, which will act like an institutional buyer of stakes in such PSUs.

With eight days left to meet the minimum 10% public holding norm, the disinvestment department is gearing up to get Cabinet approval for the proposed fund.

The government has targeted Rs 40,000 crore by way of PSU stake sales this fiscal year and has raised about Rs 1,000 crore so far. It plans to sell a stake in Neyveli Lignite Corporation on August 2 to lower its holding to 90%.