"We will expand the asset base by marketing existing schemes and introducing new schemes including a liquid fund for which we have filed a prospectus with Securities and Exchange Board of India," Damodaran, who is also administrator for UTI-I, told reporters in Mumbai at a function to launch UTI MF's operations.

UTI MF, carved out of erstwhile UTI, comprises 47 net asset value based schemes with AUM of Rs 15,000 crore (Rs 150 billion), he added.

"Besides using services of our active agents, the fund is negotiating with various financial sector players including Punjab National Bank, Bank of Baroda and SBI to distribute our products", he said.

Asked about the conflict of interest with MFs of sponsoring entities of UTI MF - SBI, BOB, PNB and LIC, Damodaran said, "We will maintain an arms length relation with them."

Currently, 4,800 UTI agents have cleared Association of Mutual Funds in India certification, he said, adding, "We will take assistance of those (agents) familiar with distribution of US-64 and assured income schemes to market bonds which are to be issued for US-64 scheme".

Damodaran said UTI-I comprising US-64 and assured income schemes would manage fund corpus on its own and share the common services like dealing room with UTI MF.

On the interest rate on tax-free US-64 bonds, he said they would be announced shortly. "They will be attractive to investors especially those in the higher tax bracket", he added.