The Department of Investment and Public Asset Management (DIPAM) has nudged mutual fund houses to consider including public sector undertaking (PSU) stocks in their core investment portfolios, emphasising the strong value and dividend returns generated by State-run firms in FY25. The department has also said that private corporations should pay fair dividend to their shareholders.
“We would nudge the private corporates to declare fair dividends to their minority shareholders so that together, we can make share market a better place for the common man,” Arunish Chawla, Secretary in the Department of Investment and Public Asset Management (DIPAM), told reporters here.
This remark has been made at a time when CPSEs (Central Public Sector Enterprises) are expected to declare dividends amounting to an all-time high of ₹1.5 lakh crore, out of which the government’s share would be over ₹74,000 crore. Chawla said while market capitalisation of PSUs is only 10 per cent of the overall market-cap, they have distributed 25 per cent of the overall dividends.
According to the revised dividend policy for CPSEs, it has been stipulated that each CPSE would pay a minimum annual dividend of 30 per cent of profit after tax (PAT) or 4 per cent of the net worth, whichever is higher, subject to the limit, if any, under any extant legal provision. However, there is no such set rule for private sector corporates and their annual dividend payout is around 20 per cent on an average.
Meanwhile, Chawla would be travelling to Mumbai soon to meet top mutual fund houses, highlight the “value creation strategy” adopted by CPSEs and pitch for increasing the share of CPSE stocks in portfolio. “We would suggest to fund managers to include PSU stocks in their portfolios so that common investors, senior citizens and minority shareholders can partake in value created by CPSE,” he said.
IDBI Bank
Talking about strategic disinvestment of IDBI Bank, Chawla said that the government has appointed asset valuers for valuation. Also, it is deliberating on share purchase agreement to be signed with prospective buyer.
“We have established a virtual data room. The facility to answer query is going on well and we have appointed an asset valuer. We are also deliberating on shareholder agreement,” Chawla said. Once the asset valuer and transaction advisor submit their reports on IDBI Bank valuation, the reserve price or the floor price for the sale would be set. Thereafter, the financial bids from interested buyers would be opened and the winner would be announced.
The prospective buyer of IDBI Bank has already been granted security clearance by the Ministry of Home Affairs and cleared fit and proper evaluation by the RBI. The privatisation of IDBI Bank has been in process for over two-and-a-half years. In October 2022, the government, together with LIC, had invited EoI from investors for privatising IDBI Bank by selling a total of 60.72 per cent stake. This includes a 30.48 per cent stake of the Government of India and 30.24 per cent of LIC.
Shares of IDBI Bank closed at ₹78.70 on Wednesday, up 2.27 per cent on the BSE.
Published on April 9, 2025
