Deployment of funds: PSUs put on notice

Vinson Kurian Thiruvananthapuram | Updated on March 12, 2018 Published on January 15, 2012


Public sector units have turned the ritualistic whipping boys as cash-strapped governments at both the Centre and State look for deliverance ahead of annual Budgets.

If the Centre is taking cash-rich but defiant PSUs to task for not singing its tune, an encore is sought to be played out, down south in Kerala.

The Centre has told PSUs that they would be strictly held to account for every investment plan of theirs, the alibi propped up for shying away from a proposed share buy-back plan.

Failure to implement these investments on schedule would not only affect the unit's ratings, but also prospects of the Chairman concerned.

The Centre seems to think that these PSUs have put a spanner in its works to bridge its fiscal deficit, which is threatening to balloon out of control.

The instructions were passed on to the PSUs at the Prime Minister's Office when it reviewed their investment plans on January 3.


Seventeen major central PSUs plan to invest over Rs 1.76 lakh crore during 2012-13, of which, Rs 1.41 lakh crore will be in the domestic market. The Centre wants PSUs to invest more in order to provide stimulus to the economy.

The investment plans provided by the PSUs would get streamlined as Memorandums of Understanding. The Department of Public Enterprises (DPE) monitors the implementation of the MoUs.

Meanwhile, exactly three days down the line, PSUs in Kerala also were put on notice by the State Government with regard to deployment of own funds through a circular.

The burden of the circular's argument was that these funds are better placed with the State Treasury, though not said in as many words.


The circular said it has come to the notice of the State Government that many PSUs and autonomous institutions park a huge amount of money with banks claiming that these funds are owned by the institutions.

While admitting the right of the boards to derive maximum deposits from their own deposits, the circular said that being public money, such investment should fetch maximum return.

In the light of this, it directed that PSUs, autonomous institutions and welfare fund boards should deposit their own funds or profits with banks ‘only in cases where it fetches more interest than that on treasury fixed deposits.'

Otherwise, such funds should be deposited only in treasuries.

The circular also made it clear that Chief Executive Officers of the PSUs or autonomous institutions shall be held personally responsible for losses, if any, on account of parking of funds in deposits offering lesser interest than that offered by corresponding treasury deposits.

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Published on January 15, 2012
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