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The Cabinet Committee on Economic Affairs (CCEA) today gave its approval for acceptance of sale consideration of UTI AMC from the existing four sponsors i.e. State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda (BOB) and Life Insurance Corporation of India (LIC).
SBI, PNB, BOB and LIC were selected by the Government as sponsors of UTI MF. They formed a UTI Asset Management Company by contributing to the capital of Rs. 10 crores, in equal proportion of Rs. 2.5 crores each. The Chairman of erstwhile UTI, Shri M. Damodaran, who was appointed Administrator, SUUTI, was also appointed as CMD of UTI AMC. The members of the Board of Directors of UTI AMC were also appointed with the concurrence of the Government and include the Joint Secretary (Capital Market) in the Department of Economic Affairs .
The CCEA also gave its approval to the following decisions taken in the meeting of team of officers with the heads of sponsor institutions :
i) The consideration amount would be Rs. 1236.95 crores to be paid by the sponsors.
ii) The sponsors will not transfer their share in future either amongst themselves, or to any outsider, without prior concurrence of the Government.
iii) It was reiterated that the sponsor institutions will be indemnified against all claims pending as on date on account of activities of erstwhile UTI prior to the Appointed Day (February 1, 2003); and
iv) The main office of UTI AMC is presently functioning from a building in Bandra Kurla complex which belongs to SUUTI. SUUTI is in the process of selling all its assets, including buildings. It was agreed that if the sponsors decide to buy the building in Bandra Kurla Complex, they would have a right of first refusal for the next six months. After that period, SUUTI will be free to sell the building to any buyer that it likes.
The total financial support provided by them in the form of cash bonds and guarantees for the bonds issued by Specified Undertaking of UTI (SUUTI) in respect of SUS-99, US-64 and Assured Return Schemes (ARSs) of the erstwhile UTI is approximately Rs. 25,088 crores. Against this liability, the total market value of the assets as on August 29, 2005 (including the remittances of Rs. 4903 crores already made to the Government) is Rs. 27,755 crores. Hence, the Government is in surplus to the tune of Rs. 2667 crores. This amount would increase or decrease, depending on movements in the stock market indices. The consideration amount of Rs. 1236.95 crore by way of sale of UTI AMC to sponsors will be an additionality for the Government.
DS/HK/LV
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