UGC questions Mumbai varsity listing plans

NEW DELHI: University of Mumbai’s move to list on the Bombay Stock Exchange (BSE) has run into trouble, with the University Grants Commission (UGC) seeking clarifications from the university over its plan to raise funds through an IPO.

The university is recognised by an Act of the state legislature and is wholly-funded by the state and central governments. The university was planning a public offer to raise funds for improving its infrastructure and offering scholarships.

Interestingly, UGC’s request for a clarification comes close on the heels of the university setting aside Rs 2 lakh from its budget to find out whether it is possible for a state-funded university to list on the bourses. The university has set up a committee to study the feasibility of the proposal.

Even as the idea is being questioned, the university argues that if public sector enterprises can access the market through an initial public offering then why should universities be prevented from doing the same.

However, it seems the university may have to give up on its plan. Sources said that if the university does go ahead with its plan of listing on the exchange, it will have to become a company. In the Indian context, education, which is a not-for-profit activity, can be undertaken only by charitable trusts and societies. This is enshrined in the Company’s Act.

If existing laws were not enough, judgements by the Supreme Court have made it clear that education is not a commercial activity. The National Knowledge Commission (NKC) had earlier suggested changes in the tax and trust laws to allow universities to invest in financial instruments and use the income to build up a corpus.