Tuesday, December 13 2005 15:24 Hrs (IST) - World Time -

New Delhi: The Government today (Dec 13, 2005) said there was no proposal to allow foreign banks to tap deposits of public sector enterprises.

"No proposal to relax conditions enabling foreign banks to tap PSU deposits is under consideration of the government," Finance Minister P Chidambaram said in reply to a question in Rajya Sabha.

"There is no restriction placed on PSUs by RBI to park their funds with foreign banks. Only government has imposed such restrictions. It (allowing them to put funds in foreign banks) is for government to consider. I will pass this suggestion to the Minister concerned," he said. Not satisfied with Minister's reply, V Narayansamy (Cong) said when the government talks of financial autonomy to the public sector, it should have full freedom to utilise its funds for higher returns.

Chidambaram said guidelines have been issued by government to PSUs with surplus funds to give special dividend and issue bonus shares.

He said surplus funds with one public sector company cannot be used for reviving another company as they were separate legal entities.

A PSU can support another PSU only if it buys equity into the other. "Only shareholders of a company can decide how to use its surplus funds," The Finance Minister said.

He was replying to a question by Dipankar Mukherjee (CPM) on whether surplus funds with PSUs, which are to the tune of Rs 2,59,000 crore, can be utilised for reviving sick PSUs.

"The reserves of a PSU belongs to that company. It cannot be taken to revive another PSU", Chidambaram said.