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May 10, 2002 | 1504 IST
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UTI wind-up option placed before Sinha

P Vaidyanathan Iyer

In a surprising move, the department of economic affairs has outlined before Finance Minister Yashwant Sinha an option to wind up the Unit Trust of India as one of the remedies to bail it out of the current crisis.

The option to wind up the mutual fund behemoth was one of the four alternatives discussed in an internal meeting convened by Sinha with his senior officials on Wednesday. "This was an option but was not endorsed in the meeting," a finance ministry official said.

According to finance ministry sources, all the options were discussed in the meeting on Wednesday.

"No final decision was taken," said an official, adding that Sinha had sought detailed pros and cons of each of these options. The financial mess in which UTI is mired in today has made it difficult for its existing or proposed sponsors in the public sector to chip in with funds and bail out the trust.

The meeting was attended by economic affairs secretary C M Vasudev, adviser to the finance minister Rakesh Mohan, joint secretary (capital markets) Jaimini Bhagwati and consultant in the finance ministry, Ajay Shah.

Officials said, the other options included floating a sponsoring company with the existing sponsors as equity contributors, roping in more public sector banks and institutions as shareholders to spread the burden and even bringing in private banks or institutions.

The option to wind up was the last option, they said. However, it involved enormous costs given that it had a bearing on the reputation of the government and the severe political opposition it would encounter, they said.

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