The Securities and Exchange Board of India has rejected UTI Mutual Fund's plans to acquire a business process outsourcing firm. This has forced the fund house to look out for a single firm to outsource its entire mutual fund registry work.

UTI MF is the country's oldest and third largest mutual fund house, with assets under management worth over Rs 35,000 crore (Rs 350 billion). It has over 95 lakh (Rs 9.5 million) customers.

"We were planning to buy a BPO firm, but our plans couldn't materialise as the Sebi objected to the whole idea of buying a BPO firm. An AMC (asset management company) is not permitted to enter this new line of business as its businesses should only be confined to fund management, PMS (portfolio management services), offshore fund management and venture equity," confirmed a senior UTI MF official.

Sources said the fund house was planning to provide investor services such as fund accounting services under one roof, and for this purpose it had appointed Boston Consulting Group to help it with the task.

"Few Indian companies have expressed an interest. But we are keen to outsource the work to a foreign company," the official added.

At present, UTI MF outsources its registry work partially to domestic firms like Karvy and Computer Age Management Systems. The complete registry work of Reliance MF is also handled by Karvy.

UTI AMC is also planning to list its shares on the stock markets through a divestment of 50 per cent of the stakes held by four promoters, viz., State Bank of India, Life Insurance Corporation of India, Punjab National Bank and Bank of Baroda. All the four financial institutions control 25 per cent each of the Rs 10 crore (Rs 100 million) paid-up capital of UTI MF.

Last week, the board of directors of the fund house had met and approved of the plan for listing and also the proposal for an offer for sale by the sponsors.

An official spokesperson for the fund house confirmed that the sponsors have agreed to offer 50 per cent of their holdings for sale in the AMC, thus making it the first domestic mutual fund house to get listed on the bourses.