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Priya Nair
Radhika Menon

Mumbai , Feb 3

SECURITIES Trading Corporation of India Ltd (STCI) plans to take Government securities to retail investors using the distribution network of UTI Securities, which it acquired recently.

UTI Securities, a broking and investment company, has 20 branches and 150 franchisees across the country.

Mr G. Narayanan, Managing Director of STCI, told Business Line that the corporation, which is the leading primary dealer in Government securities, would leverage the broking firm's network to reach retail customers.

"The return on the 10-year Government paper in India is around 7.5 per cent, with no tax deduction at source (unlike equities). This would make it an attractive investment for retail investors as well as pension funds, NGOs, and trusts," he said.

Besides, in any growing economy the debt market should be robust. The Indian securities market needs to be deeper and broader and there should be more players, he added.

As of now, banks, primary dealers, insurance companies, and mutual funds are the main investors in the debt market.

According to Mr Narayanan, STCI would soon be restructured. Following the acquisition, it would be the holding company of UTI Securities.

As STCI has got RBI approval to hive off its primary dealer business, it would also form a separate subsidiary by buying Standard Chartered Bank's stake in the joint venture with UTI Securities.

"The idea is to diversify from being a `single product and single business' institution," said Mr Narayanan.

STCI will focus on two lines of business - setting up an asset management company (AMC) and private equity placement through venture fund. The AMC is likely to take off in the next six months.

Through the venture fund, STCI will focus on small to medium companies that have a robust business model but lack capital.

STCI will invest an additional of Rs 25-30 crore in developing the UTI Securities retail e-trading platform.

It will also look to strengthen the company's FII client base. As of now, UTI Securities has tie-ups in Bahrain, Dubai, and Europe, and is looking for a partner in the US.

Speaking about the synergies between STCI and UTI Securities, Mr Narayanan said, "UTI Securities focuses on retail while we look at institutional clients. While STCI can provide funds, UTI Securities has a strong distribution network."

This acquisition will give the corporation entry into all financial product areas such as debt, equity, commodity, merchant banking, and investment banking.

Another advantage is the staff strength, which will be beefed up by around 300 people. "The biggest challenge facing the financial sector is to retain human capital," Mr Narayanan said.

More Stories on : Financial Services | Govt Bonds

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