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'Transfer RBI, LIC pie in UTI to new company'

The initial shareholders of Unit Trust of India, including the Reserve Bank of India and Life Insurance Corporation, should convert their holdings to form a sponsoring company on or before January 2002, the day when trading in US-64 scheme turns net-asset value-based, according to Y H Malegam corporate positioning committee report.

The shareholders should form a separate sponsoring company and convert their holding (seed capital of Rs 50 million and Rs 4.45 billion infused in 1999) into new entities' capital, Malegam committee said in its report.

UTI, while announcing the limited repurchase window for US-64 had announced that the scheme would be made NAV based on or before January 2002.

It was desirable that 'no single member of the sponsoring institutions should hold more than 25 per cent capital of the new company since many of them, SBI and LIC, already own or have participation in the asset management companies of other mutual funds, it added.

The sponsors should also decide whether UTI should be wholly-owned and managed by the government through participation in the sponsoring company.

Although, UTI was not directly owned by the government of India, the majority of the sponsoring institutions (and who elect the trustees), like IDBI are owned or controlled by the government, Malegam added.

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