The Indian union cabinet has reportedly deferred a decision on allowing Public Sector Undertakings to buy back their shares amid inter ministerial differences.

If the share buyback proposal goes through, the government can raise money by selling its equity stake in the PSU to the company itself.

The Department of Disinvestment has identified about two dozen cash rich PSUs and had sought the views of respective ministries on the share buyback.

The companies include the likes of SAIL, NMDC, ONGC, NTPC, Coal India, Oil India, MMTC, Neyveli Lignite, NHPC, BHEL and GAIL.

However, ministries like Petroleum and Coal are reportedly not in favor of the buyback as the move would have an adverse impact on the cash balance of PSUs under them.

It may be recalled that in order to facilitate the disinvestment process, the SEBI Board relaxed the norms for buyback of shares and dilution of equity by promoters.

SEBI has permitted promoters holding over 75% equity to use institutional placement and the exchange window to meet the mandatory 25% public holding norm.

This would help the PSUs to complete the process of selling shares within days as opposed to a few months.

(Sourced from India Infoline News Service)