UTI – II TRANSFERRED TO A NEW MUTUAL FUND SPONSORED BY SBI, PNB, BOB AND LIC

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The Government today signed an agreement with SBI, PNB, BOB and LIC to give effect to the provisions of the Unit Trust of India (Transfer of Undertaking and Repeal) Act 2002. On behalf of the Government of India, the agreement was signed by Shri U.K. Sinha, Joint Secretary (DEA) and on behalf of the Sponsors, the agreement was signed by Shri A.K. Purwar, CMD – State Bank of India, Shri S.S. Kohli, CMD – Punjab National Bank, Shri P.S. Shenoy, CMD – Bank of Baroda and Shri S.B. Mathur, CMD – Life Insurance Corporation of India. The salient features of the agreement are:

1. The Sale Consideration for the transfer and vesting payable by the sponsors to the Government will be determined within 4 months and payable within 3 years on the basis of valuation exercise by two sets of consultants/valuers.
2. The sponsors will be free to sell the rights to manage assets held by them to any third party complying with the statutory requirements including protecting the interest of the employees.
3. Sponsors will be indemnified for a period of 3 years in respect of any liability, loss or damage that may be incurred by the sponsors, for actions pertaining to the period prior to the Appointed Day.
4. Interest of the employees/officials will be protected by complying with Section 6 of the Act.

This operationalises the UTI (Transfer of Undertaking and Repeal) Act, 2002. The undertaking specified in Scheme I of the UTI will be transferred and shall vest in an Administrator. Simultaneously undertakings specified in Schedule II would vest in a specified company from the Appointed Day. In accordance with the Act, State Bank of India, Punjab National Bank, Bank of Baroda and the Life Insurance Corporation of India have set up a mutual fund named UTI Mutual Fund, a Trustee Company called the UTI Trustee company, and also established the UTI Asset Management Company, in accordance with SEBI(Mutual Fund) Regulations. Government notification regarding handing-over the undertaking to this new Mutual Fund from the Appointed Day has also been issued.

All NAV based schemes of UTI presently being run under SEBI Mutual Fund Regulations, and mentioned in Schedule II of the Repeal Act will form part of the new Mutual Fund. In order to ensure a smooth transition and factoring the accounting and software systems specifications, Government have today notified Ist of February, 2003 as the Appointed Day under the Repeal Act. Besides operational aspects this announces that UTI will, from the 1^st February, 2003 stands bifurcated.

Government has decided to appoint Shri M. Damodaran, as the first Administrator of the specified undertaking of UTI, to look after and administer the schemes forming part of the first schedule of the Repeal Act. Under this Government have continuing obligations and commitments to the investors which it shall uphold. The Board of Advisers to aid and advice the Administrator has also been notified today.