I will neither announce nor rule out anything, Mr Singh told the lower house replying to debate on UTI (transfer of undertaking and repeal) Bill 2002.
Advocating a strong and efficient regulatory mechanism for mutual funds under market operations to check any casualty like that happened in case of UTI, Mr Singh said government would fully back all the assured return schemes that would be part of UTI-I.
He, however, said UTI-II would comprise operations of all the net asset value (NAV) based schemes under Sebi regulation developed for mutual funds operating in the country.
Conceding that the first salvage operation for UTI had failed prompting the government to bring the present Bill for bifurcation of the Trust, Mr Singh said since September, UTI had received net inflow of Rs 3000 crore, a mark of mute confidence, against the total inflow of Rs 2,700 crore in 2001-02.
He said UTI-I would be managed by the government through an administrator assisted with advisors and added present administrator is a good officer from the finance ministry and will continue to administer.
UTI-II would be run on a three-tier principle to check any conflict of interest between promoters like LIC, SBI and PNB who operate their own small mutual funds. Apart from sponsors, the new mutual fund would have trustees as the second layer and the management operations as the final layer, he said.
Government would have no liability whatsoever in this as investors put in their money in NAV-based funds for higher returns and they would have to bear the risks, he said and pointed out that 37 MFs with net assets of Rs 113,000 crore were operating in India of which UTIs share was Rs 44,000 crore.
Asked if UTI-II would be privatised as had been stated by a senior official, Mr Singh said the Bill was not intended for this but three to five years down the line government can consider disinvestment in this.
On members apprehensions that UTI-I would be extinct soon, Mr Singh said I will not talk of demise of UTI-I and it would not be possible to announce any kind of new scheme for it.
Taking full responsibility for the debacle in UTI, Mr Singh said such accidents happened when the economy was transforming from controlled one to market oriented one. It is to prevent casualties like this, we need a strong regulatory mechanism. Therefore, the government has brought the present bill, he said.
The Bill provides for repealing the UTI Act of 1963 and bifurcation of assets and liabilities of UTI into two parts specified undertaking and the specified company. This will distance the government from the UTI and mutual fund activities.