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The government has decided to dispose of UTI Bank as part of restructuring Unit Trust of India. A senior finance ministry functionary said that though the details in this regard is yet to be worked out, it has been decided that the bank will be disposed of.
UTI Bank, one of the leading new generation private sector banks which began operations in 1994, is promoted by UTI. The bank was set up with a capital of Rs 115 crore with UTI contributing Rs 100 crore, Life Insurance Corporation (Rs 7.5 crore), and General Insurance Corporation and its four subsidiaries chipped in with Rs 1.5 crore each. The bank, at present, is capitalised to the extent of Rs 191.81 crore with the public holding (other than promoters) standing at 58.29 per cent.
According to the shareholding pattern of UTI Bank as on September 30, financial institutions, including mutual funds, held 60 per cent, foreign financial institutions (9.57 per cent), overseas bodies corporates (14.89 per cent), and residents stake stood at 14.04 per cent. Total number of shareholders as on September 30, 02, stood at 98,182. The government and the Reserve Bank of India do not have any share in the bank. The bank has strengths in both retail and corporate banking and its deposits had crossed Rs 12,000 crore in March this year.
An ordinance has already been promulgated to repeal the UTI Act. The ordinance will be replaced by a Bill which will be introduced in the ongoing Winter session.
After the recast, the assets and liabilities of UTI will vest with two entities, UTI-I and UTI-II, from an appointed date to be notified by the government. The net asses value-based schemes of the trust will be transferred to a company which will handle UTI-II. This company will be set up jointly by PNB, LIC, SBI and BoB with share capital contribution of Rs 2.5 crore each.
The new company will be managed professionally and will be fully compliant with the Securities and Exchange Board of India’s regulations. It will be privatised within a fixed time-frame. According to sources, the final shape of the proposed company is likely to be concretised at Thursday’s meeting. UTI-I, will be government-managed and will handle the US-64, assured return schemes, special unit scheme-1999, and development reserve fund. UTI-I will be managed by a government-appointed administrator, assisted by a team of advisers.
