The Securities and Exchange Board of India (Sebi) has decided to invest its surplus funds in fixed deposits of public sector banks, even if the returns offered by these are about 10 basis points lower than those offered by private banks.
Though Sebi's investment policy is guided by the sole criteria of highest return, now, it would consider the safety of funds as well. Sebi's surplus funds are invested according to the approved policy guidelines for investment, in place since April 2009. After its committee of executive directors (CoED) had recommended a change in the regulator's investment policy, Sebi's board had discussed the matter in its last meeting, said a senior official. The regulator's audit committee has approved the CoED's recommendations.
Currently, Sebi invests surplus funds in fixed deposits, after inviting competitive quotes from state-owned banks and approved private sector banks and institutions. The investments are subject to certain exposure limits---20 per cent for a public sector bank and 10 per cent for approved private banks or institutions. Private entities approved by Sebi for such investments are ICICI Bank, Axis Bank and HDFC Bank/HDFC. The exposure limit of 10 per cent is cumulative for HDFC Bank and HDFC.
At its recent meeting, the CoED felt while investing, both returns and the safety of funds should be considered, rather than sole criterion of highest returns.
