Cross holding method of Disinvestment refers to ____________________.

Government selling part of its Shares in one PSU to other PSUs

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Government selling Shares of PSUs to Public Sector Financial Institutions & Banks

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Government's own Financial Institutions buying Government's stake in select PSU's and holding them until any third buyer emerges

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None of the above

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Solution

The correct option is A Government selling part of its Shares in one PSU to other PSUs
Cross holding method of Disinvestment refers to Government selling part of its Shares in one PSU to other PSUs.The term disinvestment is more popularly used where central/ state government sells its holdings of public sector companies.Disinvestment means selling of Public investment to a Private entrepreneur.Disinvestment of the public sector can be defined as a process of transferring the ownership of any enterprise from public to private sector.

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Similar questions

Q. Government's own Financial Institutions buying Government's stake in select PSU's and holding them until any third buyer emerges is called as ______________.

Act of selling a part or the whole of shares of selected public sector undertakings (PSU) held by the government to generate capital receipts is called _______.

Q. Select the correct matching

(A) Liberalization	(1) Refers to partial or full transfer of ownership and control of PSUs to the private sector.
(B) Privatization	(2) Refers to relaxation of government's restriction in the scope of economic and social polices.
(C) Disinvestment	(3) Refers to a method of privatization, whereby part of shareholdings of a PSU is sold to the private sector.

Q. Many times we read in newspapers that a company is planning to bring a public issue. What does it mean?
A. Shares of the company will be issued only through public sector organisations like banks/Central financial institutions etc.
B. Shares of the company will be issued to general public only through primary market.
C. This means some stakeholders/promoters are willing to leave the company. Hence they wish to sell their stock to the general public.

Q. Identify the following as revenue receipts and capital receipts. Give reasons.
(i) Loans recovered from Public sector enterprises.
(ii) License and court fees received by the Government in the year 2014-15.
(iii) Loan taken from USA for the infrastructural developments.
(iv) Sale of shares held by Government in a PSU.
(v) Financial help from Microsoft for the victims of flood affected areas.
(vi) Amount borrowed from Japan for construction of Metro.
(vii) Dividend received by Government from a company.
(viii) Funds raised from public in the form of National Saving Certificates.
(ix) Sale of 40% shares of a public sector undertaking to a private enterprise.
(x) Profits of LIC, a public enterprise.

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