New Delhi, Sept. 29
THE Cabinet Committee on Economic Affairs (CCEA) on Thursday cleared the transfer of UTI Asset Management Company (AMC) to its four sponsors for a consideration of Rs 1,237 crore.
The amount is to be split equally between the sponsors - LIC, SBI, Punjab National Bank, and Bank of Baroda.
The transfer of the AMC would be effective from October 1.
The CCEA has, however, made it clear that sponsors would have to take prior approval of the Government for any future transfer of shares, either among themselves or to an outside party.
The four sponsors hold 25 per cent each of the Rs 10-crore paid-up capital of the company.
"The sponsors will not transfer their share in future either among themselves or to any outsider without prior concurrence of the Government.
This would ensure that the Government has the final say on transfer of equity," said the Finance Minister, Mr P. Chidambaram, after the CCEA meeting.
The Government has also said that the "sponsor institutions would be indemnified against all claims pending as on date on account of activities of the erstwhile Unit Trust of India (UTI) prior to the appointed date (February 1, 2003)."
As part of its restructuring process, the erstwhile UTI was split into two by the Government with UTI-II housing all the net asset value funds that the parent institution was running while the assured returns scheme, along with the flagship US-64 scheme, was handed to its twin entity, the Specified Undertakings of UTI (also referred to as UTI-I).
The final transfer of UTI AMC (UTI-II) has taken place nearly 20 months after the four sponsors were inducted to run the country's largest mutual fund on February 1, 2003.
At that time, the sponsors had paid a nominal consideration of Rs 100 to the Government pending negotiations with the Ministry of Finance on the actual amount to be paid for taking over the mutual fund.
Mr Chidambaram admitted that there was some delay in finalising the proposal.
He said that this was mainly due to the time required by the two valuers appointed by the Government to finalise their report.
UTI-I: Queried on the status of winding up of UTI-I, which would be shut down after taking care of all investors, Mr Chidambaram said that the process was on and that it would be wound up after liquidation of its assets.
He said that the assets were enough to meet the liability.
Other economic proposals cleared by the Cabinet and the CCEA
Indian Airlines' plan to buy 43 Airbus planes
SCI's acquisition of 2 very large crude carriers
Awarding of oil, gas blocks in Assam, Arunachal
Package for absorption of ITS officers
Relief for workers of closed textile mills
Tala hydel project in Bhutan at Rs 4,124 cr
Bill for warehouses development, regulation.