Govt may dissolve SUUTI, to form new company to raise Rs 50K cr

NEW DELHI: The government is looking at novel ways to meet its ambitious disinvestment target of Rs 40,000 crore under which the assets of SUUTI, specified undertaking of UTI, will be pledged to raise funds, to be used for buying government equity in state-owned companies.

The proposal, which is being considered by the finance ministry, involves transfer of assets of SUUTI to a holding company. Thereafter the new entity will pledge the assets of the SUUTI, currently estimated at around Rs 50,000 crore, and utilise the proceeds to buy government equity in state-run companies. The move is expected to fetch the government enough money for meeting its disinvestment target of Rs 40,000 crore in FY12. So far the government has raised only Rs 1,145 crore through sale of its equity in Power Finance Corporation.

“We will dissolve SUUTI soon and form another company. SUUTI’s assets, which are worth around Rs 50,000 crore, will be transfered to that government-owned company. It will pledge SUUTI's assets to raise loans and buy shares of existing PSUs. A cabinet note will have to be moved for the purpose,” said a senior finance ministry official. The new company will be allowed to sell PSU shares once the stock market regains its lost vigour. At present, SUUTI is governed by the UTI (Repeal) Act.