ETF may In­clude PSB Shares, Govt Hold­ing in Pri­vate Firms

Govt could di­vest its stakes in Hin­dus­tan Zinc, IDBI Bank via the new ex­change-traded fund

The Economic Times - - Economy: Macro, Micro & More - Dheeraj.Ti­wari@ times­

New Delhi: The gov­ern­ment may con­sider of­fer­ing shares of pub­lic sec­tor banks (PSBs) and its hold­ing in pri­vate firms in the new ex­change traded fund pro­posed in the bud­get for 2017-18, said a se­nior gov­ern­ment of­fi­cial. “There’s no rea­son why the new ETF can’t have banking stocks in its port­fo­lio,” the of­fi­cial said on con­di­tion of anonymity.

The gov­ern­ment may di­vest its hold­ing in Hin­dus­tan Zinc through this route since plans to sell its stake strate­gi­cally have been stuck for a long time, the of­fi­cial said. Staterun IDBI Bank, in which the gov­ern­ment has been un­able to di­vest its hold­ing strate­gi­cally, could also be part of the new ETF struc­ture.

An­other gov­ern­ment of­fi­cial said ETF could help the gov­ern­ment get around state-run banks that have been re­luc­tant to tap into the stock mar­ket de­spite req­ui­site clear­ances. “The money raised through such stake sale can be ploughed back for cap­i­tal­i­sa­tion pur­poses, if so needed,” the of­fi­cial said. The gov­ern­ment gar­nered about ₹ 6,000 crore from the last ETF, which mostly com­prised of in­fra­struc­ture stocks.

Fi­nance min­is­ter Arun Jait­ley in his bud­get speech said that a new ETF with di­ver­si­fied stocks of cen­tral pub­lic sec­tor en­ter­prises and other gov­ern­ment hold­ings will be launched in 2017-18. “Our ETF, com­pris­ing shares of ten CPSEs, has re­ceived over­whelm­ing re­sponse in the re­cent fur­ther fund of­fer­ing . We will con­tinue to use ETF as a ve­hi­cle for fur­ther dis­in­vest­ment of shares,” Jait­ley said.

Last week, eco­nomic af­fairs sec­re­tary Shak­tikanta Das told ET that the gov­ern­ment is ex­am­in­ing var­i­ous op­tions to value IDBI Bank’s large prop­erty hold­ings. The gov­ern­ment cur­rently holds 73.98% stake in IDBI and 29.59% stake in Hin­dus­tan Zinc.

For 2017-18, the gov­ern­ment has set a mam­moth dis­in­vest­ment tar­get of ₹ 72,500 crore, of which ₹ 46,500 crore is to come from reg­u­lar stake sales in­clud­ing ETFs.

The gov­ern­ment has al­lo­cated only ₹ 10,000 crore for bank cap­i­tal­i­sa­tion in the next fis­cal as part of its seven-pronged In­dra Dhanush re­vamp plan for state-run banks. As per the gov­ern­ment’s es­ti­mates banks will raise about ₹ 1.1 lakh crore from the mar­kets till 2018-19.

“Most banks have raised only a lit­tle amount through ad­di­tional tier I bonds to main­tain the reg­u­la­tory cap­i­tal,” the sec­ond of­fi­cial cited ear­lier said.

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