Govt may clear new routes for PSU disinvestment

The government is likely to give green signal to the proposal of the Department of Disinvestment (DoD) to help it raise Rs 40,000 crore through innovative means like buyback and cross-holding of equities in CPSEs.

"The buyback proposals would be placed before the Cabinet Committee on Economic Affairs [CCEA] for appropriate decision," sources said.

In a related development, the Sebi board, which met in Mumbai, has relaxed the norms for buyback of shares and dilution of equity by companies. It would help the companies to complete the process of selling shares within days, as against the normal process which can take months.

The CCEA would also consider the possibility of LIC, PSU banks or entities to buy government stake in Central Public Sector Enterprises (CPSEs).

Among other things, the disinvestment department has also suggested promoting cross-holding of equities between CPSEs, which would help the government raise money without diluting its holding in such PSUs.

The DoD has already sought the opinion of concerned ministries for buyback of shares and is believed to have identified about two dozen cash rich PSUs, with a total balance of nearly Rs 2,00,000 crore.

The companies which have been identified by the government for stake sale include SAIL, NMDC, ONGC, NTPC, Coal India, Oil India, MMTC, Neyveli Lignite, NHPC, BHEL and GAIL.

The government has been thinking of raising funds through the buyback route, as it has not been able to raise money through sale of equity in public sector units on account of uncertainty in stock markets.

Under the buyback mode, the government can raise money by selling its equity in the company to the PSU itself.