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Money > Business Headlines > Report April 11, 2002 | 1355 IST |
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UTI Bank may invest in parent's restructuringBS Economy Bureau The government is looking at the possibility of asking the UTI Bank to invest in the sponsoring company to be formed by the Unit Trust of India. The restructured avatar of the trust will have a three-tier structure in line with the requirements of the Securities and Exchange Board of India. The three-tier structure, to be in place by December 2002, will have a trustee company, a sponsoring company and an asset management company. The UTI board, slated to meet tomorrow, will take on record the audit reports of Reliance Industries and nine other companies, besides exploring options to meet the shortfall on its monthly income plans. The need to rope in the UTI Bank was primarily to help the trust in meeting the shortfall estimated at over Rs 26 billion in December 2001. The UTI had an initial capital of Rs 50 million, contributed by sponsoring institutions including the IDBI, the SBI and the LIC. Subsequently, an additional contribution of Rs 4.455 billion was made to the capital through the Special Unit Scheme in 1999. With the present sponsoring institutions refusing to provide financial assistance to the trust, the government will have no option but to fund the trust to meet its MIP redemptions. Sources said the induction of the UTI Bank as one of the principal shareholders in the sponsoring company would achieve the twin objectives of distancing the government from the trust and its part privatisation. At a later date, the trust could look at diluting its stake further by inducting other partners or by offloading stake to the public at large. They further said this would not require an appeal of the UTI Act and could be managed with an amendment. The Malegam Committee had, in fact, suggested that the sponsor should be a company in which 40 per cent of the share capital should be held by the initial contributing institutions. ALSO READ:
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