RTI roving eye likely to penetrate UTI MF guard

[ganpat1956]

Reported by: Souvik Sanyal, ET Bureau (18 Jul, 2008, 0245 hrs IST)

NEW DELHI: UTI Mutual Fund, the third-largest asset management company in India, could be made accountable under the Right to Information Act. In a move that could allow investors to seek data on the company’s financial management, the Central Information Commission (CIC) would soon consider whether the financial control and profit sharing pattern of UTI Asset Management Company (AMC) calls for public accountability under the transparency law.

Primarily, the panel would consider whether the company is substantially financed and if its affairs are controlled by the government. The company has been jointly promoted by SBI, Life Insurance Corporation, Punjab National Bank and Bank of Baroda, with each holding 25% stake.

With the law not clear as to what constitutes “substantial financing” by the government, the CIC is expected to peep into the AMC’s financial transactions to see if it has received any financial support from the government.

The RTI Act 2005 states that any institution established by the government or in receipt of direct or indirect funds from the government shall have to comply with the provisions of the law.

While UTI AMC argued that government did not have control over its management affairs, the statutory panel is expected to look at the control exerted by the promoters on the company’s financial aspects. In its order, the CIC has sought from the company last two years of balance sheets, articles and memorandum of association and details about its profit-sharing pattern.

The CIC would also be considering the mode of appointment of directors of the company, to understand the government’s influence on the company board. UTI AMC has been appointed as the asset management company of the UTI Mutual Fund on December 9, 2002, and manages a corpus of over Rs 54,652 crore as on May 31, 2008. Investors have taken the RTI route to get hold of closely-guarded financial data. Notably, the CIC had last year directed stock exchanges and SBI’s financial services arm, SBI Cards, to set up an information redressal mechanism under the transparency law.

RTI roving eye likely to penetrate UTI MF guard- MF News-Mutual Funds-Personal Finance-The Economic Times