The union cabinet on Friday a proposal to winding up Specified Undertaking of UTI (Suuti) and transfer its assets to a new 'National Asset Management Company', which will be formed for the purpose.
Suuti holds shares worth nearly Rs40,000 crore, including in blue chips ITC, Larsen & Toubro, and Axis Bank. These will be transferred to the new AMC, which will leverage these assets to raise resources for the government and also prop up other public sector shares.
The finance ministry feels there is little point in just sitting on these shares when they could be traded in the market with advantage.
The government has been considerably embarrassed in its efforts to raise funds by selling some of its holding in state-run enterprises, as most of these issues have bombed in the market. Hoping to raise Rs40,000 crore through disinvestment this fiscal, it has collected only around Rs15,000 crore.
The recent stake sale in Oil & Natural Gas Corp almost attracted derision, as state-owned Life Insurance Corp had to step in barely 10 minutes before the market closed and pick up the unsold shares.
Some wondered how it could be called a 'divestment' when one state-owned company picks up shares in another.