The government has approved setting up of Special National Investment Fund (SNIF) to help six sick PSUs, including HMT, ITI and Scooters India, to make them compliant with the 10 per cent minimum public holding norm of market regulator Sebi.
The SNIF would be maintained outside the Consolidated Fund of India and will be managed by independent professional fund managers, to be appointed.
Cabinet Committee on Economic Affairs yesterday approved setting up of Special National Investment Fund (SNIF), Information and broadcasting Minister Manish Tewari told reporters here.
The other companies which will be benefited from the creation of the fund are Andrew Yule & Yule Company Ltd, Fertilizer and Chemical (Tranvancore) Ltd, Hindustan Photo Films Manufacturing Company--in which the government has to bring down its stake to 90 per cent.
Shares of the companies transferred to the fund will be sold in the capital market gradually over a period of five years by the fund managers. The entire block of shares to be transferred without any consideration, Finance Minister P Chidambaram said after meeting of Cabinet here.
The modalities of the sale and the price will be decided by the existing Empowered Group of Ministers (EGoM).
The proceeds received by the SNIF from sale of these shares will be used for social sector schemes of the government.
NIF was created in 2005 with a purpose to receive disinvestment proceeds and to invest the same to generate earnings without depleting the corpus.
The earning of the fund is used for select social sector schemes.