The Union Cabinet has appointed UTI Mutual Fund and SBI Mutual Fund as managers of the corpus lying with Post Office Life Insurance Fund (POLIF) and Rural Post Office Life Insurance Fund (RPOLIF).

Both the entities have a combined corpus of more than Rs 10,000 crore. While postal life insurance has a corpus of Rs 8,934 crore, the assets under management of rural postal life insurance fund was Rs 1,625 crore as on March 2006.

P. Chidambaram, Finance Minister said “SBI mutual fund and UTI Mutual Fund are public sector mutual funds. They are going to invest the funds in a safe and conservative manner to earn better returns. This is patterned on the National Investment Fund (NIF). One of the disinvestment money that came to us, we put in NIF and then the money was given to SBI, UTI and LIC (roughly Rs 1,000 crore) with an advisory board. This is simply following the footsteps of NIF.”

LIC was not selected as it was in competition with POLIF and RPOLIF, Chidambaram added.

The Cabinet has also approved constitution of an Investment Board for the purpose of laying down policy guidelines and investment strategy, which will set the framework for the day to day decisions on investments.

A chief investment officer with the rank of additional secretary will be appointed along with four directors for managing and devising day-to-day strategies for these investments.

It is expected that the mutual funds will invest the money in shares, when asked if the postal money would find its way to the stock market, Chidambaram said it was up to the fund managers to decide.