The finance ministry has revived the process of winding up UTI-I. It has called for a review meeting on the status of the Specified Undertaking of UTI, or UTI-I, to take stock of the progress in dismantling it as soon as possible.

The meeting will also consider the shortfall in redemption position of different schemes under the erstwhile Unit Trust of India. On October 31, the notional shortfall was estimated at Rs 5,700 crore (Rs 57 billion).

However, there is no problem on this account because the finance ministry is committed to meet the entire liability of the mutual fund.

Moreover, the budgetary allocation for 2003-04 and supplementary demands for grants are considered adequate to meet the redemption pressure on different schemes of UTI-I.

The requirement for the next fiscal will be finalised by January.

UTI-I has been offloading scrips in different companies gradually. To avoid volatility in the market, the ministry had advised the mutual fund not to offload the entire stock precipitously.

The review meeting is significant since there has been hardly any progress on the closure of UTI-I, though the Cabinet approved it last year.

The closure also involves sale of UTI-I's stake in several entities, including UTI Bank, the National Stock Exchange, the Stock Holding Corporation of India and IL&FS.

In July this year, UTI-I, which holds a 17 per cent stake in the Stock Holding Corporation of India, had written to all domestic banks asking them if they were interested in picking up the stake.

But the mutual fund has drawn a blank so far because no bank is interested in pumping in equity without getting some significant stake in the management of the company.

The Centre has, therefore, toyed with the proposal to offer 51 per cent of the company's equity to prospective investors, by bunching with UTI-I's share the holding of some of the other stake holders in the company.

Similarly there has been no progress in the sale of UTI-I's 33.56 per cent stake in UTI Bank. The finance ministry is in favour of getting rid of the entire stake in one go.

It has however not as yet set any reserve price for the sale of the erstwhile UTI's stake in the private sector bank.

Beginning of the end

• The finance ministry has called for a review meeting on the status of the Specified Undertaking of UTI, or UTI-I, to take stock of the progress in dismantling it as soon as possible.
• The meeting will also consider the shortfall in redemption position of different schemes under the erstwhile Unit Trust of India. On October 31, the notional shortfall was estimated at Rs 5,700 crore.
• The budgetary allocation for 2003-04 and supplementary demands for grants are considered adequate to meet the redemption pressure on different schemes of UTI-I. The requirement for the next fiscal will be finalised by January.