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Govt virtually rules out World Bank suggestion to split UTI

The government on Tuesday virtually turned down a suggestion by the World Bank to split Unit Trust of India into smaller entities.

"Presently government is not inclined to consider the suggestion favourably," Minister of State for Finance B V Patil told the Rajya Sabha in a written reply.

Stating that there was no such demand from the World Bank, Patil said that it had only suggested splitting saying it was needed for reduction of the dominant position of UTI, whose more than 60 per cent share of the mutual fund market contributed substantially to the high concentration of ownership in the major stocks.

Patil said that market regulator Securities and Exchange Board of India (SEBI) had expressed itself against the suggestion saying that advantages of scale and the wealth of experience under one roof would be taken away in case of spilt.

"SEBI also believes that it is necessary to have large institutional investors to provide competition and a smaller UTI will not be able to provide competition to large foreign financial institutions," he added.

Credit Rating: Replying to another question, Patil said that recent revision in India's foreign currency sovereign credit rating by Standard and Poor's from positive to stable should not have any material impact on the Indian economy.

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