PRIVATISATION

Privatisation means transfer of ownership and/ or management of an enterprise from the

public sector to the private sector. It also means the withdrawal of the state from an industry
that has been reserved for the public sector to private sector.

 Ways of privatisation

Initial public offering (IPO): It is the first issue of equity shares to the public by an unlisted
company. PSUs by offering IPOs can dilute their shareholdings when the general public
subscribes to the share.

Strategic sale: It means PSU selling of a large chunk of government holdings to a private
enterprise, which would acquire equity holdings of up to 51%.
Sale to foreign companies: Where a PSU is sold to a company incorporated in another
country.

Direct negotiations: It is used for the privatisation of properties with specific or unique
features that may limit the no. of potential interested buyers.

Public sale of shares: It is a method for selling shares of PSUs by the state.

Public Auction: It is used with a view of obtaining the highest sale price for the privatised
property.

 Disinvestment
Disinvestment can be defined as the action of an organisation (or government) selling or liquidating an asset or
subsidiary.
The Government can sell its enterprises completely to the private sector or disinvest a part of its equity capital held by it
to the private sector companies or in the open market.
 FINANCIAL MARKET REFORMS

• Financial sector is the backbone of any economy and it plays a crucial role in the mobilisation and allocation of
resources.
• The main objective of the financial sector reforms is to allocate the resources efficiently, increase in the return
on investment and hastened growth of the real sectors in the economy.
• Financial market reforms include money market reforms and capital market reforms…

What's money market reform?

• Money market reform is a set of SEC rule amendments meant to address any potential financial instability that
could be caused by money market funds. The amendments took effect on October 14, 2016.
• Here are the key elements:
• Establishes 3 categories of money market funds—retail, government, and institutional.
• Restricts who can invest in retail money market funds.
• Allows certain funds to impose liquidity fees and temporarily suspend withdrawals (known as gates) in certain
circumstances.