Citing record dividend payouts, Mutual funds to back PSUs: GoI

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New Delhi: The Centre on Wednesday urged mutual fund managers to increase their exposure to state-owned enterprises, citing their strong dividend performance and role in equitable wealth distribution.

“We suggest fund managers include public sector stocks in their portfolios so that common investors, senior citizens and minority shareholders can deploy their savings productively,” said Arunish Chawla, secretary, department of investment and public asset management (DIPAM), at a media briefing.

“While the market cap of public sector undertakings is only 10% of the overall market capitalization, they have distributed about 25% of total dividends,” he added.

He said the state-run firms delivered a record ₹1.5 trillion ($17.3 billion) in dividends in FY2024-25. For FY2025-26, the government expects to receive ₹69,000 crore in dividends from state-run enterprises.

Chawla is scheduled to visit Mumbai next week to meet top fund managers and present the government’s perspective. “We will also nudge private corporations to declare fair dividends for their minority shareholders so that together, we can make our stock market a more inclusive and rewarding space for the common investor,” he said.

Speaking on the strategic divestment of the government’s stake in IDBI Bank, Chawla said the Centre is moving forward with its decision while simultaneously advancing work on several other fronts.

He noted that a virtual data room has been set up, and the query resolution process is progressing smoothly. Asset valuers have been appointed for the divestment, and multiple valuation methodologies are being explored.

He added that discussions on the share purchase agreement are currently underway, and the financial bids will be invited at an appropriate stage. The government and the Life Insurance Corporation of India (LIC) hold a 94.72% stake in IDBI Bank. LIC holds 49.24% stake, and the government 45.48% in the lender.

The Centre and LIC plan to jointly divest a 61% stake in IDBI Bank, with the government selling 30.48% and LIC 30.24% stakes, respectively.

While Chawla refrained from giving a timeline for the strategic divestment of IDBI bank, he did hint that it is expected to close in FY26 after being delayed due to various reasons in the last few years.

“We are moving ahead with the decision on IDBI divestment and parallely working on several other fronts too (in respect to divestment, and offer for sale),” he said.