The acid test

Mumbai:
17 January 2003

The current UTI chairman, Meleveettil Damodaran, will be the administrator of UTI-I and will also head UTI-II. Damodaran’s heading UTI II will have to endorsed by the new sponsors for UTI-II, including State Bank of India, Life Insurance Corporation, Bank of Baroda and Punjab National Bank.

The sponsors of UTI-II have set up a UTI Mutual Fund, a UTI Trustee Company and also a UTI Asset Management Company, as per the provisions of Securities and Exchange Board of India regulations (Sebi), to manage UTI-II.

This new mutual fund will be managing 43 net asset value (NAV)-based schemes of UTI with a combined corpus of Rs 15,000 crore. The sponsors have made a joint contribution of Rs 10 crore to set up the asset management company.

Finance secretary Dr S Narayan said the agreement marks the operationalisation of the UTI (Transfer of Undertaking and Repeal) Act 2002. “All NAV-based schemes of UTI will form part of the new mutual fund.” The US-64 and other assured income schemes will remain with UTI-I, which will be looked after by an administrator.

The government has also notified names of advisors to UTI-I, including
D Swarup, additional secretary (budget); U K Sinha, joint secretary (capital markets); A N Shanbagh, tax expert; and N C Bhide, head of the National School of Banking.

Says Damodaran: “UTI-I will manage assets worth Rs 31,000 crore. The UTI-II has assets worth Rs 15,000 crore. UTI has received Rs 1,200 crore and is not likely to ask for more funds in the current fiscal for meeting redemption pressure. However, much would depend on redemptions in February and March.”