The Hindu Business Line : UTI Mutual, SBI MF to manage postal life insurance monies

New Delhi, Dec 13 UTI Mutual Fund and SBI Mutual Fund have been given the mandate to manage the funds mobilised under the life insurance services provided through the post offices network.

Such services are currently administered by the Postal Department under the banner of Postal Life Insurance (PLI) and Rural Postal Life Insurance (RPLI) schemes.

The Union Cabinet on Thursday cleared the legal deck for the appointment of these two public sector fund managers through relaxation of the existing provisions of General Financial Rules.

The accumulations under the PLI and RPLI would be divided among the two fund managers, who would make investments in line with an investment strategy to be decided by an investment board that would be set up for the this purpose.

Corpus

As on end March 2006, PLI had a corpus of about Rs 8,934 crore and RPLI had corpus of about Rs 1,625 crore. These monies are currently lying in a special deposit scheme.

The Finance Minister, Mr P. Chidambaram, told reporters on Thursday that the decision to entrust the funds to the two public sector fund managers was intended at securing a better return on them, “by following a very safe and conservative investment policy”.

“SBI mutual fund and UTI Mutual Fund are public sector mutual funds. They are going to invest the funds in a safe and conservative manner to earn better returns. This is patterned on the National Investment Fund (NIF). One of the disinvestment money that came to us, we put in NIF and then the money was given to SBI, UTI and LIC (roughly Rs 1,000 crore) with an advisory board. This is simply following the footsteps of NIF,” Mr Chidambaram said.

On why Life Insurance Corporation (LIC) was not selected for managing the PLI and RPLI funds, Mr Chidambaram said that LIC was not selected as it was in competition with postal life insurance. “You cannot give the funds of postal life insurance to LIC to manage and that is why LIC was not selected,” he said.

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