UTI, LIC & SBI to gain as govt defines PSU MF

The government today said public sector mutual funds are those where the government along with other Central Public Sector Enterprises (CPSEs) holds 50 per cent or above, clearing the haze over the definition of PSU MF.

Industry players said the definition will help UTI, LIC, SBI and Canara Bank Mutual Funds qualify for the proposed investments by public sector undertakings (PSUs) in mutual fund schemes.

As per clause 619 of the Company Law, only those companies in which government holding is 50 per cent and above are called PSUs.

The government had in August 2007 allowed CPSEs to invest their surplus cash in mutual funds owned by public sector AMCs. However, CPSEs wanted a clarification on the definition of a public sector mutual fund.

Currently, the government has nil or very little holding in MFs promoted by CPSEs, which include asset management companies of LIC, UTI, Punjab National Bank and State Bank of India.

The current total surplus of CPSEs is estimated at over Rs 3,00,000 crore. Navratna and mini-Navratna CPSEs account for a lion's share of this money.

LIC, SBI, BoB and PNB hold 25 per cent stake each in UTI Mutual Fund. In CanBank MF, the Canara Bank holds 51 per cent while the remaining is held by Robeco, the Dutch financial services company.