New Delhi: Moving ahead with the proposal to sell government equity through buy-back mode in PSUs, the Department of Disinvestment has circulated a cabinet note to seek the opinion of the concerned ministries.

"They (the Department of Disinvestment) have come up with some papers. We have to give a reaction to that. We have received a cabinet note (on buy back of Coal India shares)," Coal Secretary Alok Perti told reporters on the sidelines of the India Energy Summit organised by Indian Chamber of Commerce.

The government is looking at innovative methods to sell its holding in public sector units to meet the disinvestment target of Rs 40,000 crore in the current fiscal.

Under the buyback mode, the government can raise money by selling its equity in the company to the PSU itself.

Coal India, world's largest coal miner, is one of the several PSUs which have been identified by the DoD for buy back of equity.

"We will react (to the proposal) after seeking Coal India's views," Perti said.

The government is considering to raise funds through the buyback route as it has not been able to raise money through sale of equity in PSUs on account of uncertainty in the stock markets.

 The department of disinvestment (DoD) has prepared a list of about two dozen PSUs having large surplus cash balance, including Coal India, Steel Authority of  India (SAIL), NMDC, Oil and Natural Gas Corp (ONGC), NTPC, Oil India and MMTC.

Such companies may be asked to buy back about 5 per cent equity from the shareholders. Under the current regulations, market regulator Securities and Exchange Board of India (Sebi) allows companies to buy back their own equity from shareholders.

 With only Rs 1,145 crore in its kitty so far from disinvestment, there are apprehensions whether the mammoth target of Rs 40,000 crore for this financial year would be met.

 Volatile stock market conditions have forced government to delay stake sale in PSUs. Global equity markets have been on a downside on fears of a slow recovery in the Eurozone economies as well as the debt crisis in US.

(Agencies)