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UTI assets may be warehoused
Sidhartha in New Delhi | March 09, 2005 17:10 IST
The finance ministry is considering transferring the assets of the Specified Undertaking of the Unit Trust of India (SUUTI), estimated at over Rs 15,000 crore (Rs 150 billion), to another bank or financial institution once the entity is wound up after March 2006.
The assets include equity shares, bonds of the order of Rs 15,000 crore and assets of the assured-return schemes and the erstwhile Unit Scheme 64.
At the Sensex level of around 6,200, the assets were valued at Rs 15,000 crore, institutional sources told Business Standard.
"The valuation would have increased now that the market is around 6,900. Warehousing is a possibility. The assets can be handed over to another financial institution, which can manage them," the sources said.
The government will allocate an additional Rs 80 crore (Rs 800 million) this month to meet the shortfall in the three remaining monthly income plans (MIPs) with the SUUTI. The schemes are to mature during the course of the next financial year.
The Centre has also budgeted for an assistance of Rs 1,200 crore (Rs 12 billion) during 2005-06, though sources said funds may not be required.
They added that the valuation exercise for the assets of UTI Asset Management Committee was also nearing completion and the government would get Rs 1,000-1,200 crore (Rs 10-12 billion) from the sale of the assets to the sponsors, Life Insurance Corporation, Punjab National Bank, Bank of Baroda and State Bank of India.
According to the agreement, the government can realise 2.5-8 per cent of the assets under management.
At present, UTI AMC manages assets of the order of Rs 20,000 crore (Rs 200 billion).
While any of the four sponsors can take over the assets, the deal also provides for all of them, or a combination, also acquiring the assets.