New Delhi, Oct 6 (UNI) The government today launched the National Investment Fund (NIF) which aims to use the returns from investment of disinvestment proceeds to fund social sector projects and partly to meet capital investments in profitable public sector units.
The fund was lauched by Finance Minister P Chidambaram with the handing over of Rs 994.82 crore received from the sale of Government equity in Power Grid Corporation of India Ltd (PGCIL) to the three Fund Managers.
The fund will use 75 per cent of its annual income to finance selected social sector schemes which promote education, health and employment. The residual 25 per cent of the annual income will be used to meet the capital investment requirements of profitable and revivable CPSEs.
The three fund managers chosen for NIF is the UTI Asset Management Company Pvt Ltd, SBI Funds Management Pvt Ltd and LIC Mutual Fund Asset Management Company Ltd.
The government had decided to set up the NIF in the year 2005 and was to come into effect from April 1, 2005 but could not take off die to government grappling with some administrative problems for the fund.
The government envisages to channelise all proceeds from disinvestment of Central Public Sector Enterprises will into NIF. NIF will be maintained outside the Consolidated Fund of India and is to be professionally managed to provide sustainable returns to the Government, without depleting the corpus, said a statement.
SEBI guidelines will apply to the operation of the fund by the selected fund managers under the discretionary mode of the Portfolio Management Scheme, and the three managers have been appointed for an initial period of two years, extendable on the basis of their performance subsequently.
The government appointed a part time advisory board to advise the CEO, NIF on various aspects of functioning of the NIF like investment strategy, allocation of funds to the selected fund managers, negotiation of management fee and charges to be paid to the Fund Managers.
UTI Asset has been given Rs 368.91 crore, SBI Funds a sum of Rs 368.91 crore and LIC Mutual Rs 257.00 crore as funds to be managed under the NIF.