Calcutta, July 21: Punjab National Bank (PNB) will consult Principal Finance Group of the US ? its partner in life insurance and mutual funds ? before taking a final decision on its stake in UTI MF. The bank holds a 25 per cent stake in the mutual fund.

The bank wants to know from Principal whether there will be a clash of interest if it continues to hold its stake in UTI MF.

The bank sells Principal’s mutual funds. It has also entered into an insurance brokerage business with Principal and has received RBI approval to set up a life insurance venture with Principal as a promoter.

PNB chairman and managing director S.C. Gupta said, “We had meetings with the government and will have another round of talks. Before that, we are discussing the possible issues among ourselves. Talking to Principal is a step towards that.”

Gupta said the government is considering combinations of the existing sponsors taking over UTI MF, including the option of the four sponsors retaining their hold over the asset management company.

The four existing sponsors of UTI MF are Life Insurance Corporation, State Bank of India, Punjab National Bank and Bank of Baroda. Each has a 25 per cent stake in the asset management company.

It is learnt that whoever individually or collectively takes over the fund would be asked to pay a premium to the government for acquiring the assets. The government is likely to seek a substantial premium from the institution that takes over the mutual fund.

UTI MF currently manages assets worth Rs 23,000 crore under its 50-odd schemes.

In the past, talks for change of sponsors of UTI MF has got stuck on the issue of payment of premium to the government for taking charge of the huge assets under management.

Institutions were unwilling to pay a premium since the mutual fund was going through a rough patch in the immediate aftermath of the bifurcation of the erstwhile UTI because of a dull capital market.

However, in the present scenario, the sponsors might find it difficult to argue against paying a premium in the wake of UTI MF doing a major turnaround buoyed by a general improvement of the stock markets and the management’s efforts to infuse fresh vigour in running the fund.