Shares of ITC, Axis Bank and Larsen & Toubro are likely to stay with the Specified Undertaking of the Unit Trust of India, which was to be wound up in June.

Legal opinion received by the government suggests that SUUTI can exist as long as all investors in one of the schemes floated by the erstwhile Unit Trust of India have not redeemed their investment, sources close to the development said.

The value of the shares of the three blue chips alone was estimated at over Rs 15,000 crore. In addition, there are investments in many unlisted companies, the value of which has not been ascertained by the government or SUUTI. The entity has opted for a negotiated settlement in many cases.

SUUTI took over the assets and liabilities of all assured return schemes of the Unit Trust of India. Funds that offered market-linked returns were transferred to UTI Asset Management Company.

Armed with the legal opinion, the government is expected to move swiftly to secure an extension for SUUTI. "It will help the government provide an open-ended extension to SUUTI since some investors of the Unit Scheme-64 and earlier schemes are yet to redeem their units," said a source.

There is only one remaining scheme -- ARS Bonds -- that will cease to exist from April 1, SUUTI said in a statement issued on Monday.

K N Prithviraj, the government-appointed administrator of SUUTI, said the entity had cash liquidity to redeem the ARS Bonds, for which the outstanding amount is an estimated Rs 5,600 crore. He, however, declined to divulge the amount of assets that would remain after all the redemptions are over.

"Under law, I have to transfer all the remaining assets to the government," Prithviraj said but refused to disclose the future course of action.

Continuing with SUUTI would mean that the government has to forego the Rs 9,000 crore it had budgeted for the current financial year. In the absence of the sale of shares, the Centre's finances would be under additional pressure. "If the government provides an extension and the redemption is over, the shares will be warehoused with SUUTI and can be sold once market conditions improve," said a source.

SUUTI was looking to sell its stake in L&T and ITC, where it is the third largest shareholder, to government-owned entities. In the case of Axis Bank, which was promoted by Unit Trust of India, the idea was to sell the shares to institutional investors. But poor valuations deterred it from doing so.

Since early July, the value of SUUTI's stake in Axis Bank has dropped around 50 per cent, and the value of the three blue chips, based on trading prices, is down 25 per cent.

Sources said, barring state-owned Life Insurance Corporation, none of the domestic institutional players had resources to buy the entire stake in these companies. Further, acquiring 27 per cent stake in Axis Bank would have required LIC to seek special permission from the Reserve Bank of India and the Insurance Regulatory and Development Authority. The proposal to sell Axis to public sector players had to be shelved after RBI said Axis had received a licence as a private bank.