Cabinet empowers Board of Directors of the holding, parent PSEs to allow disinvestment

The Union Cabinet on Wednesday approved a proposal for empowering the Board of Directors of the Holding / Parent Public Sector Enterprises to recommend and undertake the process for Disinvestment (both strategic disinvestment and minority stake sale) or closure of any of their subsidiaries/units/stake in JVs.

The meeting was chaired by prime minister Narendra Modi.

The Cabinet has also empowered Alternative Mechanism to accord ‘in principle’ approval for disinvestment (both strategic disinvestment and minority take sale) / closure of subsidiaries/units/sale of stakes in JVs of Holding / Parent PSEs [except the disinvestment (minority stake sale) of Maharatna PSEs which was delegated to them and review the process of disinvestment/closure by Parent / Holding PSEs, a press release by the government said.

The process for undertaking the strategic disinvestment transactions/closures to be followed by the PSEs should be open, based on the principles of competitive bidding and consistent with the guiding principles to be laid down.

For strategic disinvestment, such guiding principles will be laid down by DIPAM, the release added.

Presently, the Board of Directors of Holding or Parent PSEs have been delegated certain powers under the Maharatna, Navratna and Miniratna categories to make equity investments to establish financial joint ventures and wholly-owned subsidiaries and undertake mergers or acquisitions subject to certain ceilings of net worth.

The proposal intends to reform the functioning of PSEs, by allowing greater autonomy to the Board of Directors of the Holding PSEs for taking decisions.

The aim is to expedite the decision-making process and cut wasteful expenditure by the PSEs.

With inputs from agencies

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