As it tries to mop-up resources for its funding plan, the Centre is likely to divest further stake in Axis Bank that it holds through the Specified Undertaking of the Unit Trust of India (SUUTI).
“The quantum of the stake sale is yet to be finalised but it will be in the range of 9 per cent to 10 per cent. It will happen this fiscal,” said a senior official, adding that the modalities of the proposal are yet to be finalised.
SUUTI currently holds 11.7 per cent stake in Axis Bank after selling off 9 per cent stake in the lender in March this year that helped raise Rs 5,500 crore.
Officials said that this fiscal’s stake sale in Axis Bank would also happen through a block trade on the bourses.
The Budget documents for FY15 have indicated a stake sale through SUUTI that holds shares in Axis Bank, ITC Ltd and Larsen & Toubro. “It is estimated that an amount of Rs 6,500 crore will be realised from the sale of stakes in SUUTI,” it said, adding that the total target for disinvestment worked out to Rs 63,425 crore for the current fiscal. Set up in 2003 after the Unit Trust of India was wound up, SUUTI also holds 11.28 per cent stake in ITC Ltd and 8.19 per cent stake in L&T as on March 31, 2014.
Meanwhile, the Union Budget has also proposed extending income tax exemptions to SUUTI till March 31, 2019. “The mandate of SUUTI is to liquidate government liabilities on account of the erstwhile UTI … Since some of the tasks of SUUTI are still pending closure, it is proposed to extend the exemption for a further period of five years,” said the Budget document.
This is the third such extension of tax exemption to SUUTI as some of its schemes are yet to be wound up. The exemption from income tax or any other tax on income, profit or gains was originally provided in the Repeal Act, 2002, that transferred the UTI to the special undertaking.