Cabinet okays UTI MF sale to 4 sponsors

The government today cleared the long-awaited sale of UTI Asset Management Company to three state-owned banks and LIC at Rs 1,237 crore but made it clear that stakes could not be sold without its approval.

"The government will have a final say on transfer of equity of UTI AMC," finance minister P Chidambaram told reporters after a meeting of the cabinet committee on economic affairs.

State Bank of India, Punjab National Bank, Bank of Baroda and the LIC, which have been selected by the government as sponsors of the AMC, would not be able to transfer the equity without he prior sanction of the government, Chidambaram said.

"The sponsors will not transfer their share in future either among themselves or to any outsider without prior concurrence of the government," Chidambaram said. The minister said though the transfer had to be effective from October 1, the proposal has been cleared only today.

While admitting there had been some delay in finalising the proposal as the legal transfer agreement was signed as early as 15th January, 2003, Chidambaram said this was owing to time taken for acceptance of the two valuer's report on the AMC.

On the winding up of UTI-I, which was handling all the assured return scheme including the flagship US-64 scheme, Chidambaram said it would be wound up after liquidation of assets, which were enough to meet the liability.

The three banks and the LIC were selected by the government as sponsor of UTI MF and they formed the asset management company by contributing Rs 2.5 crore each as capital totalling rs 10 crore.