The Hindu Business Line : UTI-I to exit from subsidiaries

WHILE the future of UTI Mutual Fund remains hazy, clarity is emerging on the roadmap for its twin outfit - the Specified Undertaking of Unit Trust of India (SUUTI) also called UTI-I.

In what would pave the way for the eventual winding up of the entity, the Government has decided that SUUTI would have to exit completely from all its subsidiaries, including the wholly owned UTI Securities Ltd and UTI Technology Services Ltd.

The Administrator of SUUTI would also have to find buyers for the undertaking's minority equity holding in the various institutions, including the three credit rating institutions, Crisil, ICRA, and CARE.

However, no decision has been taken on SUUTI's holding in UTI Bank Ltd.

Drawing up plans for exiting UTI Bank is a complex one since they have to be woven to suit the stringent Reserve Bank of India guidelines on the shareholding limits in banks.

"We have decided that SUUTI's holding in the subsidiaries and the other institutions would be sold. However, no decision on UTI Bank has been made," a senior Finance Ministry official.

SUUTI has 8.37 per cent stake in Crisil, while its holding stands at 7.95 per cent in ICRA and 12.5 per cent in CARE. The undertaking's stake in UTI Bank currently stands at 37 per cent.

Besides these, SUUTI has holding of 27.8 per cent in NSDL, 16.9 per cent in SHCIL, and 20.5 per cent in the National Stock Exchange.

The undertaking is also the sole promoter of UTI Investment Advisory Services Ltd, which acts as an advisor for offshore funds promoted by UTI, and the UTI Institute of Capital Markets.

SUUTI (UTI-I) and UTI MF (UTI-II) are twins born in 2003 as a fallout of the Government's efforts to restructure and revitalise the erstwhile Unit Trust of India in the interest of millions of investors.

While UTI MF was given the responsibility to run all the net asset value based schemes of UTI, SUUTI has been housing all the assured return schemes and UTI's flagship scheme, US-64.

The Government also placed the various institutions in which UTI had stake under the control of the SUUTI Administrator.

Most of SUUTI's assured returns schemes have since been wound up, with only two schemes - Monthly Income Plan 2000 (III) and MIP 2001 - being in existence.

Both these schemes are to be would up later this year after settling the dues of investors.

The Government would then have to decide on how to deal with US-64 bonds issued to investors in lieu of their holding in the scheme and the ARS bonds issued to investors in lieu of schemes such as the Children's Growth Fund 1986 and 1994 and Rajlakshmi Unit Scheme 1993 and 1999.

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