Finance Ministry thinks SBI, PNB, Bank of Baroda are planning to exit UTI MF, but SBI has no clue about it

To pare down their exposure to non-core assets and raise capital for the core business of lending, state-run banks - State Bank of India (SBI), Punjab National Bank (PNB) and Bank of Baroda that hold stakes in UTI Mutual Fund (UTIMF) may exit the nation's oldest mutual fund.

A senior Finance Ministry official said that there had been some discussion on the banks exiting the AMC. "They are looking at a way out," he said.

Three state-run banks jointly hold 55.5% of the asset management company - SBI, PNB and Bank of Baroda own 18.5% each. The rest is held by Life Insurance Corp (18.5%) and a unit of T Rowe Price Group (26%).

However, the official did not mention which bank or banks could sell the stake. A proposal to list UTI AMC has been under the Finance Ministry's consideration for a while.

Meanwhile, banks have a different story to tell. SBI chairman Arundhati Bhattacharya denied any plans to sell the stake. PNB's newly appointed managing director and chief executive, Usha Ananthsubraniam, said it wasn't considering any such proposal. Bank of Baroda interim MD and CEO Ranjan Dhawan could not be reached for comment.

UTIMF has more than Rs 1 lakh crore of assets under management. It was carved out of the erstwhile Unit Trust of India (UTI).

The UTI (Transfer of undertaking & Repeal) Act 2002 passed by Parliament had paved the way for the bifurcation of UTI into Specified Undertaking of Unit Trust of India (SUUTI) and UTI Mutual Fund (UTIMF).

Earlier, the Finance Ministry had asked state-run banks to look at divesting their noncore assets in order to meet burgeoning capital requirements. Financial Services Secretary Hasmukh Adhia had recently said that banks were themselves working on their strategy to get out of noncore assets and that they would hive off noncore investments at an appropriate time.

Last week, the government announced a seven-pronged revamp plan for banks. Titled 'Indradhanush', it included a Rs 70,000 crore capitalisation of state-run banks over four years.

(Image: Indiatimes)