What should have been a routine appointment of the head of a private mutual fund after UK Sinha left UTI to head Sebi in February 2011 resulted in a bitter board struggle with the government and the financial institutions it owns on one side and the foreign investor (T Rowe Price, TRP) on the other. Worse, the commitment made to TRP, that UTI Mutual Fund would be professionally managed was given the go by as the finance ministry pitched to make a bureaucrat UTI’s head even while a professional headhunt had thrown up other names—the bureaucrat in question happened to be the brother of the advisor to the then finance minister.
With the government-owned investors in UTI—SBI, PNB, LIC and Bank of Baroda—toeing the government line, the search for UTI’s head went nowhere; as did UTI’s performance and since the time Sinha left, UTI’s assets grew 11.2% as compared to around 20.8% for the industry as a whole. While some progress has finally been made with the appointment of Leo Puri as the new MD, political wrangling has made sure he still hasn’t been made the CMD, the job he was originally selected for. And though Sebi rules say promoters of AMCs—which is what SBI, PNB, LIC and BoB are—cannot hold shares in another AMC (like UTI), this is yet another rule that has coolly been given the go by.