UTI-I is likely to get the mandate to manage the shares of the divested public sector companies. The announcement is likely to be made in the Budget.
Senior government officials said vesting UTI-I with the job would be a logical step because it basically was an asset management company.
The proposal to rope in the former mutual fund was mooted by the disinvestment department and is being debated with the finance ministry.
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The issue has assumed significance because the government, after a relatively successful spell of disinvestment in the current and last fiscals, is now saddled with a big corpus of shares of several public sector units.
Government officials said the shareholdings in several cases were big enough to determine the appointments of directors on the boards of these companies, which, in turn, could influence their policies.
Accordingly, the buy and sell decisions for shares in these firms are expected to be critical. There is, therefore, a need to set up an asset management company to handle such operations on a day-to-day basis.
The active management of the proceeds can also mean buying of shares from the market instead of passive sales because this can help the Centre fund several expenditure heads.
The profit from the proceeds of such operations will accrue to the Consolidated Fund of India. This is necessary because of the repeated calls to keep the disinvestment proceeds out of the fund.
The government also feels that since UTI-I has the experience of managing shares, it will be appropriate as a asset management company.
However, this may need a legislative change in the former