New Delhi, Jan. 13: The government will transfer management control of Unit Trust of India II (UTI II), cleaved out of the erstwhile Unit Trust of India (UTI), to the asset management company (AMC) formed by three state-run banks and a financial institution.
“As a step towards privatisation of UTI II, the government will transfer the management control on January 15 to the AMC,” said finance ministry sources.
The AMC (which will have a paid-up capital of Rs 10 crore) has been floated by State Bank of India along with Life Insurance Corporation, Bank of Baroda and Punjab National Bank with a capital infusion of Rs 2.5 crore each.
In August, the government had bifurcated the fund into two parts — UTI I and UTI II and provided a Rs 14,500-crore bailout package to meet possible liabilities from its fund schemes of assured returns comprising UTI I. It was decided that UTI II would be run by an AMC.
UTI-II is composed of the net asset value (NAV) schemes of Unit Trust of India and has about 50 per cent of the mutual fund industry’s exposure to the equity market.
“The agreement for the transfer will be signed by the chairman of the Unit Trust of India along with the chiefs of the banks and LIC,” said the official, adding the finance minister Jaswant Singh and the finance secretary will be present.
However, the Joint Parliamentary Committee had voiced concerns on the holding of Life Insurance Corporation (LIC) and State Bank of India’s in the recently formed asset management company. “As both LIC and SBI have in the past sponsored their own mutual funds, there will be a conflict of interest and thus the need to separate themselves from UTI.”