The Hindu Business Line : PSU investments in MFs

The Government must have an answer as to why it decided to allow PSUs to invest in mutual funds (MFs) run by public sector financial institutions such as the LIC, the SBI and the UTI.

From the taxpayer’s angle, there could be two reasons. First, no entity can park its idle funds for meagre returns.

The Government is no exception to this theory. The MFs, which went through a bad phase, are now under SEBI’s surveillance. There is transparency and investors know where the MFs are investing the funds and the NAVs are published on a periodical basis.

The Government could have decided not to restrict investments to public sector institutions alone as there are many other MFs which perform much better than public sector MFs.

But it is the prerogative of the Government to give greater priority to the public sector.

Second, more inflows to the MFs — be it public or private — will create ample job opportunities for educated youth in asset-management companies.

C. P. Velayudhan Nair Kochi

Letters to the editor and contributions canbe sent by e-mail to: bleditor@thehindu.co.in

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