The Life Insurance Corporation of India may hold up to 10 per cent in the holding company proposed by UTI Mutual Fund chief M Damodaran.

Another 40 per cent is proposed to be offered to a clutch of banks, including three state-owned banks and two private banks, each holding 8 per cent.

The remaining 50 per cent of the holding company may be offloaded through a public offer. Damodaran, who is also the administrator of the UTI Specified Undertaking (UTI-I), had early this month discussed the proposal to form a holding company with Finance Minister P Chidambaram.

The company is expected to hold the erstwhile Unit Trust of India's strategic stakes in UTI Bank, IL&FS, National Stock Exchange, Over The Counter Exchange of India and rating agency Crisil.

Damodaran told Business Standard, "Discussions have been held with the finance ministry which cannot be disclosed."

The proposal is, however, in contrast to initial indications that UTI will sell its stake in non-core companies. UTI was one of the original promoters of the NSE, IL&FS and UTI Bank, and its stakes are now held by UTI-I, carved out of UTI.

When the government had bifurcated UTI in November 2002, all the net asset value-based schemes were transferred to UTI Asset Management Company, while the assured return schemes, real estate holdings and the subsidiaries of the erstwhile UTI were transferred to UTI-I.

UTI-I holds 33 per cent in UTI Bank and a 26.98 per cent stake in IL&FS. It is one of main promoters of NSE and holds less than 10 per cent in Crisil and ICRA.

The proposal for the holding company is aimed at leveraging the UTI brand and ensuring that the strategic stakes continue to be monitored by the holding company once UTI-I ceases to exist.