No PSU investment in public accounts

The government has decided to bar public sector companies from parking surplus cash in Public Accounts of India from January 2005.

"No further deposits shall be accepted with effect from January 1, 2005 and the outstanding balances shall cease to bear interest with effect from the same date," a finance ministry order said.

Officials said that the move would stop easy cash management by public sector units (PSUs), which parked funds in the public accounts to mitigate their risks and often did so at the expense of investments.

The government currently pays 6 per cent interest on such deposits by the PSUs.

Funds from small savings, provident funds and other deposits are kept in the Public Accounts of India, while the Consolidated Fund of India deals with revenues and loans raised by the government.