The Cabinet Committee on Economic Affairs today approved the following:
(i) The disinvestment proceeds with effect from the fiscal year 2013-14 will be credited to the existing public account under the head National Investment Fund (NIF), and they would remain there until withdrawn/invested for the approved purposes.
(ii) The NIF will be used for the following purposes:
(a) Subscribing to the shares being issued by the Central Public Sector Enterprise (CPSE) including Public Sector Banks (PSBs) and Public Sector Insurance Companies, on rights basis so as to ensure that 51 percent ownership of the Government is not diluted.
(b) Preferential allotment of shares of the CPSE to promoters as per Securities and Exchange Board of India SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 so that Government shareholding does not go down below 51 percent, in all cases where the CPSE is going to raise fresh equity to meet its capexprogramme.
(c) Recapitaliztion of PSBs and Public Sector Insurance Companies.
(iii) Fund Managers presently managing the NIF will stand discharged of their responsibility from the date the funds and the interest income are transferred to the fund.
The NIF was constituted by the Cabinet Committee on Economic Affairs on 27th January 2005. The objectives structure and administrative arrangements, investment strategy were notified in November, 2005, and the NIF started functioning from October, 2007. As on 31st August 2012 the corpus in the NIF consisted of Rs.1814.45 crore, comprising the disinvestment proceeds of Power Grid Corporation of India and the Rural Electrification Corporation Limited done during 2007-08. This corpus is presently invested through three Public Sector fund managers (SBI, LIC and UTI Mutual Funds).