PUBLIC FLOAT NORMS: GOVERNMENT GIVES ITSELF A REPRIEVE

The government has given itself one more year to pare its shareholding in listed public sector undertakings (PSUs). The finance ministry amended the Securities Contracts (Regulation) Rules, 1957, to give PSUs time till August next year to achieve a minimum 25 per cent public float. Without the leeway, the Centre was staring at a challenging proposition of divesting shares worth over ~20,000 crore in nearly two dozen PSUs.

Last week, the Securities and Exchange Board of India (Sebi) said the government had expressed difficulties in meeting the August 21, 2017, deadline. The regulator has to enforce the minimum public shareholding (MPS) norms, which are set by the government.

The 25 per cent MPS deadline for private sector listed companies was June 2013. Despite giving itself three extra years, the government has failed to meet the public float norm.

Market experts said the government should spread out the disinvestment in the 24 PSUs over the next 13 months to avoid bunching and to ensure the fresh deadline is met.

MPS norms are aimed at having adequate free-float in the market, to ensure better price discovery and to curb manipulation in share prices.