Warning against conflict of interest of financial institutions, which have been chosen to sponsor UTI-II, the Joint Parliamentary Committee probing the stock scam and UTI muddle, has recommended that sponsors should be those “that have not sponsored their own mutual fund”.

The committee recommended that the schemes in UTI-I should also be managed by independent fund manager preferably from UTI-II for a fee.

"The management fee can be worked out keeping in mind that the government has already provided a huge bailout to the UTI," the JPC report tabled in Parliament said.

As regards the management in UTI-II, it said in case the JPC's recommendations that sponsors should be those who don't have their own mutual fund is not feasible, "Government must spell out in detail both through legislation and through policy guidelines as to how it proposes to insulate UTI-II from the inherent conflict of interest as regards these institutions."

It said the financial institutions that have been chosen to sponsor UTI-II have in the past sponsored their own mutual funds.

Also both LIC and SBI previously had their nominees on the board of trustees of UTI.