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Friday, May 10, 2002

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More sponsors for revamped UTI?

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NEW DELHI: THE Government has decided to initiate talks with a few state-owned insurance companies and banks to rope them in as sponsors for the proposed sponsor company for the troubled mutual fund, Unit Trust of India (UTI).

Having taken an in-principle decision to put in place a three-tier structure to make the mutual fund SEBI-complaint, the Finance Ministry now wants to cast the net wider to include more sponsors for the restructured UTI. The initial contributors to the capital of Rs 5 crore of UTI include the Industrial Development Bank of India, State Bank of India and the Life Insurance Corporation of India.

However, these institutions recently took the stand that they were not the sponsors of UTI when they were told to make up for the shortfall in the Monthly Income Plan 97 (1) redeemed on April 30.

The present initial contributors to the capital of UTI are likely to figure in the list of sponsors in the three-tier structure along with state-owned banks and insurance companies, according to senior Government officials.

SEBI guidelines stipulate that a sponsor company should be set up with a capital of Rs 5 crore. The Malegam committee on corporate repositioning set up by UTI had recommended that the sponsor company should be capitalised at Rs 550 crore.

However, this recommendation has not found favour with the Trust as well as the Government as it is reckoned that there is no need for substantial capitalisation of either the sponsor company or the Asset Management Company (AMC).

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