Securities and Exchange Board of India (SEBI) on Friday imposed a penalty of Rs 10 lakh each on Life Insurance Corporation of India (LIC), State Bank of India (SBI) and Bank of Baroda (BoB) for failing to bring down their stake below 10 per cent in UTI Mutual Fund (MF) within the stipulated time period.
The market regulator passed separate orders against these three PSUs for non-compliance of Regulation 7B of SEBI MF Regulations. Under the said regulation, no sponsor of a mutual fund is allowed to hold more than 10 per cent shareholding of any other mutual fund or a trustee company.
LIC, SBI and BoB are the sponsors of LIC MF, SBI MF and Baroda MF. At the same time, they hold over 18 per cent stake in both UTI MF and UTI Trustee Company.
“I am of the view that the said penalty is commensurate with the default committed,” SEBI adjudicating officer said.
The three firms have told the regulator that the initial public offering (IPO) of UTI MF will open in the first week of September. Through the IPO, LIC, SBI and BoB will divest their holdings in excess of 10 per cent, which will help in compliance of the Regulation 7B.
