The decision to appoint Damodaran as CEO has been finalised after a series of discussions between the new sponsors and the government. A formal announcement on this is expected soon.
Damodaran is also likely to be appointed the administrator for UTI-I. The four sponsors -- Life Insurance Corporation, Bank of Baroda, Punjab National Bank and State Bank of India -- will sign a sponsorship agreement with the government on Wednesday.
All fixed assets of the mutual funds will remain with UTI-I. UTI-II will pay a fee to UTI-I for the use of these facilities.
As far as the employees are concerned, they will be transferred to UTI-II under the existing service conditions. At a later stage, the sponsors might consider a voluntary retirement scheme for excess staff, if any.
"Various schemes to be managed by the asset management company will pay 1-1.5 per cent management fee to take care of the salary bill of the employees. In case UTI-I needs the services of any employee, it can use this for a fee," a source familiar with the bifurcation process said.
The four sponsors will hold equal stakes of 25 per cent in the asset management company that will manage UTI-II. The four partners will invest Rs 2.5 crore (Rs 25 million) each in the asset management company.
The signing ceremony is expected to be attended by a host of finance ministry officials, the chiefs of the sponsor banks, Damodaran and Finance Minister Jaswant Singh.
After the signing of the agreement, a subsequent date will be set for bifurcating UTI. This follows the repeal of the UTI Act, 1963, which cleared the way for the bifurcation.
Subsequent to the formal bifurcation, UTI-I will control US-64 and all the assured-return schemes launched by the trust.
UTI-II will control all the net asset value-linked schemes, including US-2002, the net asset value-linked portion carved out of US-64. UTI-II will privatise it after making it financially strong within five years.
The net asset value-linked schemes of UTI have a corpus of over Rs 17,000 crore (Rs 170 billion).