UTI’s only private sector investor, US firm T Rowe Price (TRP) has complained to the Securities and Exchange Board of India (Sebi) on what it termed the Life Insurance Corporation of India’s (LIC) false declarations on the independence of its nominee, former LIC chief DK Mehrotra, on the UTI asset management committee (AMC) board. In addition, TRP has cited instances of how all the PSU shareholders — LIC, State Bank of India, Punjab National Bank and Bank of Baroda — are interfering in the UTI AMC’s functioning.

While TRP owns 26% of UTI AMC’s equity, the PSU institutions own 18.25% each.

And while the board of trustees of UTI mutual fund had, in May, directed that all PSU shareholders had to dilute their shareholding to below 10% by March 2019 as per Sebi rules, the UTI AMC board refused to fall in line and did not take any action on this when it met on Monday. The board of trustees had also said that Puri should get a one-year extension so as to complete the IPO and that, meanwhile, an independent search process be conducted for his successor. Sebi will have to now take a view on whether the board of trustees is more powerful than the UTI AMC board.

Under the law, TRP has written to Sebi, the four PSU financial institutions are supposed to appoint directors to the UTI AMC board who are independent. Yet, it says, there is enough evidence to show that Mehrotra has a pecuniary relationship with LIC — that is, he is not independent. When Mehrotra was an LIC employee and on the board of Tata Steel, the Tatas paid his share of profits, bonus, etc, to LIC. But, TRP has said, this policy continued even after Mehrotra had retired, making it clear he had a financial relationship with LIC. If Mehrotra is not ‘independent’, he cannot be on the board of UTI AMC. Some months ago, LIC had tried to push Mehrotra’s candidature as UTI AMC’s chairman.