PSUs TO LOSE OUT ON INTEREST

Public Sector Companies may continue to lose interest income on their idle deposits as the Government has decided against allowing banks to bid for their bulk deposits. Top PSUs, sitting on surplus cash of over Rs.100000 crore, have been demanding re-start of the bidding as it ensures higher interest rates.
According to a government directive, PSUs have to park 60% of their surplus funds with state-owned banks. Earlier, PSUs used to park funds with banks that offered them the highest rates. In November 2008, the government asked banks to stop bidding for such high-cost deposits. Since then, banks have been taking bulk deposits at card rates.
Source: http://www.business-standard.com/india/news/psus-to-lose-outinterest/377134/