New Delhi, Nov. 28: The BJP-led government today said it may consider divesting in UTI-II after a gestation period of three to five years. It also curiously claimed today its Rs 14,000 crore UTI package was “no bailout.”
Finance minister Jaswant Singh made these statements during the course of a debate on the UTI Repeal Bill, which will formally replace an ordinance on the same issue, in the Lower House of Parliament.
The Bill, which splits the giant mutual into two and provides for the government taking on the liability of repaying any shortfall in incomes from UTI’s assured income schemes like US-64, was passed by the Lok Sabha today after CPM leader Basudeb Acharia withdrew a resolution disapproving the ordinance brought by the government last month.
It will now have to be passed by the Upper House, a move which is fraught with danger as the Congress which has significant strength there may seek embarrassing amendments to the Bill. However, as it is a money bill, the Upper House cannot force any amendments but merely send it back to the Lok Sabha with recommendations which may or may not be accepted by the Lower House.
During the course of the debate, the finance minister also hinted that UTI-I will be dissolved after complete redemption of all assured return scheme units to stake-holders. Singh also said UTI-I would be managed by the government through the current chairman of UTI who would act as administrator assisted by advisors, selected by his ministry. UTI-II, on the other hand, will be run under a three-tier system — promoter banks and financial institutions who would be charged with overall supervision, trustees of the UTI who would oversee management and top management who would look after day-to-day administration of the fund.
While the government will bear total liability for UTI-I, it will have no liability for UTI-II as all schemes with it are net asset value based. UTI-II will be also made totally Sebi compliant.
During the course of the debate, the opposition pilloried the BJP government for promulgating an ordinance on UTI just before Parliament was to be convened and before the Joint Parliamentary Committee probing mismanagement and possible fraud in UTI had given in a report.