It is reliably learnt that the Union finance ministry and the department of disinvestment had initiated a dialogue with the heads of FIs for offloading PSUs equity to them. The FIs are, however, not yet willing to give in.

The FIs' negative stand on buying PSUs shares is based on their assessment that they will not be able to profitably re-sell them in the market given the poor valuation of their shares in the market. The Centre's efforts over the past two years to moblise Rs 10,000 crore by divesting PSU shares has not made much headway. Unless the Centre issues some kind of a fiat, the FIs are not going to touch them. Senior officials in the financial institutions say that "in order to raise resources, encourage wider public participation and promote greater accountability, up to 20 per cent of the government equity in selected public sector undertakings (PSUs) would be offered to mutual funds and financial institutions as also to workers in these firms."

Interestingly, the financial institutions have begun discussions among themselves on the crucial issue of strategic sales of their combined holdings in certain companies to the highest bidder.

The matter has also been discussed with finance ministry officials. Selling their holdings to the highest bidder will help unlock value for the FIs in companies bogged down by poor performance.

According to institutional sources, the view now is to get all investment institutions to undertake strategic sales of their combined holdings as only that is being seen as a step which will have an impact.