 "DIPAM to urge mutual funds to include PSU stocks in their portfolios")
The Department of Investment and Public Asset Management (DIPAM) plans to nudge mutual fund houses to consider including public sector undertaking (PSU) stocks in their core investment portfolios, highlighting the strong value and dividend returns delivered by state-run firms in 2024-25 (FY25).
“While the market capitalisation (mcap) of PSUs is only 10 per cent of the overall mcap, they have distributed 25 per cent of the total dividends. We would suggest that fund managers include PSU stocks in their portfolios so that common investors, senior citizens, and minority shareholders can deploy their savings productively and partake in the value created by PSUs,” DIPAM Secretary Arunish Chawla said during a media briefing on Wednesday.
Chawla observed that central public sector enterprises had announced record dividends of ₹1.5 trillion in FY25, with the government’s share reaching ₹74,016 crore — a reflection of strong performance and consistent shareholder returns.
To promote inclusivity and enhance the Indian equity market for retail investors, the government also plans to advocate for greater accountability in the private sector regarding dividend distributions.
“We would also nudge private corporations to declare fair dividends to their minority shareholders so that, together, we can make our share markets a better place for the common man,” Chawla said.
He also noted that discussions are underway on the shareholder agreement for the disinvestment of IDBI Bank.
“The strategic disinvestment of IDBI Bank is moving ahead in line with the government’s decision, and we are progressing on several fronts in parallel,” Chawla said.
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While refraining from giving a specific timeline for the transaction’s completion, he mentioned that several key steps have already been taken, including setting up a data room and addressing bidders' queries. An asset valuer has also been appointed. “Financial bids will be invited when the appropriate stage is reached,” he told reporters.
As part of the disinvestment plan, the Centre, along with Life Insurance Corporation (LIC) of India, will sell a 61 per cent stake in the bank, comprising 30.48 per cent from the Government of India and 30.24 per cent from LIC. The process, which began in January 2023, is expected to be completed within this financial year, Chawla said.
The DIPAM secretary further emphasised that the department’s strategy is aligned with prevailing market conditions. “The financial instrument we use will be based on market dynamics. This is part of the department's well-organised strategy,” he said, considering the ongoing volatility in global and domestic equity markets as the US takes measures on reciprocal tariffs.