Country's largest mutual fund UTI AMC on Friday became a private company with the four sponsors paying Rs 1,236.95 crore (Rs 12.369 billion) to the government.

"UTI AMC will run as a private mutual fund competing with rest of the industry under the regulations and supervision of Sebi," Finance Minister P Chidambaram said at a press conference in New Delhi.

Chairmen of four sponsors -- A K Shukla of Life Insurance Corporation, A K Purwar of State Bank of India [Get Quote], S C Gupta of Punjab National Bank [Get Quote] and A K Khandelwal of Bank of Baroda [Get Quote] handed over cheques worth Rs 309 crore (Rs 3.09 billion) each to Chidambaram.

Sponsors will own 25 per cent stake each in the mutual fund that manages Rs 25,000 crore (Rs 250 billion) assets of 6.7 million investors.

Though the four sponsors were managing the affairs of UTI AMC, Chidambaram said: "Today is the culmination of government's efforts to restructure UTI."

Wishing UTI AMC and its investors all the success, the finance minister said: "I am sure that under the new management, it will reach new milestones and continue to serve the basic purpose for which the erstwhile UTI was created in 1964."

UTI was set up to function as a vehicle for mobilising domestic savings needed for the growth of Indian economy and channelising the benefits of economic growth to households. Unit Trust of India was split into two entities -- UTI-I (or Specified Undertaking of UTI) and UTI AMC after the fiasco of its flagship scheme US-64 in 2001.

The government transferred assured return schemes under SUUTI and issued bonds totalling Rs 14,500 crore (Rs 145 billion) -- US-64 bonds for 6.75 per cent coupon rate and ARS bonds at 6.6 per cent to bailout the beleagured fund that had over Rs 60,000 crore (Rs 600 billion) of assets under its management in 2001.