The government is likely to make it mandatory for the investment bankers to reveal name of their existing clients while bidding for managing share sale offer of a state-run firm.The Finance Ministry is expected to come out with a notification this week making the disclosure mandatory.
The new rules are proposed to be made applicable starting with share sale offer of National Buildings Construction Corporation Ltd (NBCC), sources in the finance ministry told PTI.
“Government does not want to repeat any SAIL-like situation. Hence it wants investment bankers to divulge their clientele so that there is no clash of interest,” the source said.
The Government had to postpone disinvestment of SAIL last year, as the selected merchant bankers also engaged themselves with share-sale of Tata Steel, thereby causing a “conflict of interest” between the two parties.
Sources said the government was initially planning to bar those merchant bankers from managing PSU share sale offer who were also handling the offers of private sector companies in similar line of business.
“Such a rule would have left us with hardly any merchant bankers available for managing PSU disinvestments as most of them are involved with one or the other private sector companies at any given time,” sources said.
The government has set a target of raising Rs 40,000 crore in the current fiscal through disinvestment in various public sector undertakings.
The Cabinet has already given clearance for disinvestment of SAIL, ONGC and HCL, while the government raised Rs 1,162 crore by divesting a 5 per cent stake in Power Finance Corporation last month.