EPF subscribers be allowed to buy PSU equity: Assocham / Dec 19, 2005 / Webindia
From Indiapensions
EPF subscribers be allowed to buy PSU equity: Assocham
The Associated Chambers of Commerce and Industry of India (Assocham) today suggested an amendment to the Employees Provident Fund Act to make a provision for its subscribers to buy equity in profit making PSUs.
In a Paper on 'Option to Convert Small Savings to PSU equities', the industry chamber states that a huge sum of Rs 110,184 crore has been lying in the EPF fund without accumulating return. A significant portion of the sum should be used for buying profit making PSUs equity through an amendment of the Act.
Most of the profit making PSUs are looking for funds to support their modernisation and diversification drive and if the subscribers to the EPF are permitted to further invest their parked money in the fund, the move will be beneficial to both the PSUs and the EPF subscribers, ASSOCHAM President Anil K Agarwal said in a statement here.
The Paper which has been submitted to the government states that the option to convert small savings to PSU equity at the time of maturity, was the best one as the return on investment in specified securities permitted under the Act was not generating enough resources to meet committed liabilities of the Fund.
By permitting small investors to be part of the growth strategy of PSUs, the government should provide investors with the option at the time of maturity of the investments to convert the amount into PSUs equity. This would avoid actual outflow of money from the government system and investors would get a better option for re-investment, ASSOCHAM said.
The paper has also called for permission to commercial banks to invest 20 per cent of their excess SLR investments, which currently work out to about Rs 40,000 crore for buying PSUs equity in units identified for disinvestment.
The apex chamber also suggested that the Government consider liberal additional stakes in PSUs by offering shares to banks and retail investors, as this will promote the timely provision of high quality infrastructure, that the country needs so badly.
It has also recommended that as Small Savings Schemes come up for redemption, a market price driven conversion option to PSU Equity may be given to Indian retail savers. The Government can also look to raise resources by divesting their stake in the PSU's, by offering for sale their shares to banks as well as Indian retail investors.
