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UCO, BoI urged to be sponsors for UTI

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Anindita Dey Mumbai
The government of India has initiated negotiations with banks without mutual fund arms for picking up a sponsorship stake in UTI mutual fund.
 
It has sounded out Kolkata based UCO Bank and Mumbai based Bank of India, sources in the banking sector said.
 
Officials close to the development said Bank of India has already vetted the proposal and given its consent. They added that UCO Bank is still examining the issue.
 
The government's move assumes significance as the existing sponsors of UTI "" State Bank of India, Bank of Baroda and Life Insurance Corporation (LIC) "" have to eventually move away from the sponsorship as they all have well run mutual fund arms, causing a conflict of interests.
 
At present, UTI mutual fund has distribution tie ups with three banks - Bank of India, Corporation Bank and Allahabad Bank. Under the existing arrangement, these banks not only gain from adding the country's biggest mutual fund's schemes in their list of financial products sold but also get dividends from UTI.
 
Earlier, Allahabad Bank and Bank of India had announced their willingness to subscribe to 10 per cent and 15 per cent stakes, respectively, in ASREC India Ltd, the asset reconstruction company being set up by UTI Mutual Fund.
 
ASREC, in which the Unit Trust of India (UTI) will hold a 51 per cent stake, is being set up with a Rs 5 crore authorised capital base. LIC was reported to be willing to take a substantial stake in the company.

 
 

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First Published: Mar 06 2004 | 12:00 AM IST

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