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Money > Business Headlines > Report November 1, 2001 |
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Govt may offer 60% UTI stake to multilateral FISubhomoy Bhattacharjee The government is expected to rope in a multilateral financial institution as the strategic partner for Unit Trust of India. According to senior government officials, the Centre is keen that an institution like Asian Development Bank or International Finance Corporation be brought in as a strategic partner in the sponsoring company of UTI. The Malegam committee report has recommended offering 60 per cent stake in UTI's sponsoring company to the strategic partner which need not be an Indian entity. The move will also ensure that the mutual fund behemoth does not get picked up by any private sector player, which can be embarrassing for the government. Finance minister Yashwant Sinha has repeatedly denied any move to privatise UTI. Officials said that talks with the institutions would proceed simultaneously with the repealing of the UTI Act as suggested by the Malegam panel. The finance ministry is keen on introducing the Bill to repeal the UTI Act in the Winter Session of Parliament. UTI's new structure envisages a three-tier structure with a sponsor, a trustee and an asset management company in place. Officials reason that it would be difficult for a domestic financial institution to pick up 60 per cent equity in UTI's sponsoring company. Though IDBI and other FIs had contributed to the Trust's seed capital in 1963, many FIs and even a number of banks had bailed out the Trust in 1999 when a special unit scheme was launched. Many of the institutions and banks have subsequently set up their own mutual funds. They might hence not be too keen to subscribe to the equity of a competitor fund, they feel. Roping in a multilateral financial institution also relieves the pressure on the domestic FIs from having to cough up an additional Rs 3.30 billion for 60 per cent stake in the sponsoring company and another Rs 2.40 billion for acquiring up to 40 per cent stake in the AMC. FIs are already reeling under the burden of huge non performing assets with IDBI's NPA crossing the Rs 100 billion mark as on March-ended 2001. YOU MAY ALSO WANT TO READ:
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