IOC caps investment in equity MFs at $500 Mn

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New Delhi: Fortune 500 firm IndianOil's (IOC) proposed strategy to invest its surplus funds is restricted to only big equity-linked mutual fund schemes of minimum $125 million, reported The Economic Times. An amount of $500 million has been proposed as an overall ceiling for Investments in equity-linked MFs at any point of time. The IOC board may, however, enhance the limit subject to investments in equity-oriented schemes not exceeding 30 percent of surplus funds of longer tenor. The company plans to invest only its long-term (minimum one year) surplus funds in equity-oriented schemes of MFs. However for debt oriented schemes of MFs, the company has not proposed any such restrictions. IOC's proposed policy would be effective after the approval of the petroleum ministry, an official source said. On August 2007, the government had allowed navratnas and mini-ratnas to invest their surplus funds in debt and equity-oriented schemes of SEBI-regulated public sector MFs. Earlier, PSUs could invest their surplus in debt-based units of UTI only. As per the revised guideline, IOC can have option to invest in mutual funds of UTI, SBI, LIC, GIC, BOB, Canbank and PNB. "As short-term and time-bound investment in equity-oriented schemes may not be prudent, it is proposed that surplus fund available for longer tenor, that means, preferably for more than two years but at least for a year," a company source said.