Financial Daily from THE HINDU group of publications
Thursday, Nov 28, 2002
Financial Daily from THE HINDU group of publications Thursday, Nov 28, 2002 |
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Markets
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Asset Management Companies RBI clears bank, FI stakes in UTI AMC
Sarabjeet Sen
NEW DELHI, Nov. 27 THE process of setting up of a new asset management company (AMC) to manage the net asset value (NAV) based schemes of the UTI, has been taken a step further with the Reserve Bank of India granting approval to the four banks and institutions to hold stake in the new entity. The new entity which till now was being referred to as UTI-II has now been christened as UTI AMC Private Ltd. The four promoters — Life Insurance Corporation of India, State Bank of India, Punjab National Bank and Bank of Baroda — are awaiting the approval of the Securities and Exchange Board of India (SEBI) to hold equity as a promoter in a second AMC. Being banking entities, the approval of RBI was also mandatory. According to senior bankers involved in the exercise, SEBI's approval would be of a special nature since all the four promoters have already promoted their own subsidiary mutual funds. "SEBI would have to give a special permission to hold stake in a second AMC," said the chief executive of one of the four promoter institutions. He was hopeful that the approval from the capital markets regulator would be granted within a fortnight. These banks and institutions have already registered UTI AMC Private Ltd which would manage the NAV-based schemes of the UTI after bifurcation of assets and liabilities. The bifurcated UTI would have another entity — UTI-I, in which all the assured return schemes including the US-64 would vest. Each of the four promoters would chip in Rs 2.5 crore each for the paid-up capital of Rs 10 crore for new AMC. For these new promoter institutions being stakeholders of the UTI AMC Private Ltd is basically a holding operation for the Government which wants to privatise the entity. The Government has already indicated that it would privatise the UTI AMC Private Ltd in due course and the original promoters — the four banks and institutions would then exit. The proceeds of the sale of this AMC would flow to the Government. The four promoters have initiated a due diligence exercise for the NAV-based schemes of UTI.
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