Hike in retail share of PSU selloffs mooted

The ministry of company affairs has recommended the government to increase the share of retail investors in the disinvestment of public sector companies.

P C Gupta, minister of company affairs, at the sideline of the 3rd national conference of small investors, said, "The wealth of public sector units should be offered to local investors rather than to foreign institutional investors. The ministry has proposed to the government that the 10 per cent limit reserved for retail investors in public sector unit offerings be raised so that small investors get a chance to invest."

Many more public sector offerings are expected in the future, the minister added. Apart from the 25 per cent reserved for the retail category, an additional 10 per cent was reserved for retail investors in the secondary offerings of Oil and Natural Gas Corporation, IPCL, GAIL India and IBP.

The ministry is also considering some changes in the Companies Act.

Gupta said, "The Companies Act needs to be simplified. Right now there are 786 provisions in the Act which will be reduced to one-third in the next few months."

The Irani Committee working on the recommendation made by industry representatives on the changes in the Companies Act is expected to submit its report in the next two months.

The final draft is expected to be presented in the winter session of the Parliament, the minister added.

Meanwhile, the Securities and Exchange Board of India has in-principle approved the increase in the limit of small investor category in initial public offerings from the existing 25 per cent to 35 per cent.

The minister said the move, if cleared by the government, will increase the participation of retail investors who are the real back bone of any equity market.

Earlier, in its presentation, the minister emphasised on investor education and the need to convert savers into investors.

The gross household savings has risen to 22.6 per cent of the gross domestic product in 2002-03 from 18.6 percent in 2000.