Mumbai, Sept. 17: Bank of India (BoI) is exiting its mutual fund business. The bank has decided to merge BoI Asset Management Company Ltd, its wholly owned subsidiary, with itself.

The bank today informed the stock exchanges that it has decided to take this step of merging its subsidiary with itself to “exit from the mutual funds business”. The BoI scrip closed at Rs 26.25 on the BSE today after opening at Rs 26.45, static over its previous close.

The bank’s exit from this business follows its earlier decision of selling two mutual fund schemes to Taurus Mutual Fund. The Boinanza Equity Linked Saving on Tax Scheme and the Boinanza Exclusive Growth Scheme with a total corpus of Rs 22 crore, were earlier sold on an asset liability basis to Taurus. As part of this deal, the bank will get a commission of around 2 per cent over the NAV.

The third scheme that remained with the bank, matured on March 31, 2002 and reports said that an outgo of over Rs 20 crore accrued to the bank when this scheme redeemed.

Banking circles said that BoI’s decision in exiting this business mirrors similar acts by other nationalised banks that closed down their loss making subsidiaries, whose activities were primarily into merchant banking and mutual funds, at the behest of the Reserve Bank of India (RBI). Sources added that among the nationalised banks, State Bank of India (SBI) has so far been the lone player who has put up a spirited show in this tough business.

BoI started the mutual fund business with a total of six schemes. Its biggest scheme was an assured returns scheme — BoI Double Square Plus — where investors were promised Rs 400 for every Rs 100 invested, in 10 years’ time. Reports said that the total outgo towards these redemptions were to the tune of Rs 1,000 crore .