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August 27, 2001
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Money > Reuters > Report August 27, 2001 |
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UTI board to discuss setting up holding firmThe board of the Unit Trust of India, the nation's largest mutual fund manager, will discuss a proposal to set up a holding company and asset management firms in September, its chairman said on Monday. The UTI chairman Meleveetil Damodaran said at a news conference that the proposal would be part of the discussions at the board meeting, which will focus on how the group should be restructured to improve efficiency. Last month, UTI suspended redemptions in its flagship Unit Scheme-64 (US-64), in which some 20 million investors hold units, provoking noisy scenes in Parliament and demands from the main opposition Congress party that Finance Minister Yashwant Sinha be censured. The ban was later partially eased and redemptions in US-64 were allowed from August 1 at a fixed price set by the fund. "One of the options we would look at when the board meets in September is having a holding company and setting up one or more asset management companies to manage UTI's different funds," Damodaran said. But he added that any restructuring plan to improve efficiency could only be implemented if the UTI Act was amended by parliament. Created in 1964 to channel public savings for economic growth, UTI, which has about 41 million investors in its 87 schemes, is not regulated by the Securities and Exchange Board of India but governed by a special act of parliament. "Hopefully, the UTI Act would be amended within the next six months so that we have the power to set up asset management companies," Damodaran said. He said UTI would start repurchasing units in the US-64 scheme by end-October or early November. Damodaran told Reutersearlier this month that he expects the net asset value of US-64 -- which is widely speculated to be lower than its Rs-10 face value -- to catch up and perhaps exceed the fixed monthly redemption price by next year. UTI has announced a monthly schedule of redemption prices it would offer to US-64 investors, beginning at Rs10 in August and rising by Rs 0.10 every month to Rs 12 by May 2003. The fixed price gives investors assured returns. UTI has never disclosed its net asset value. ALSO READ:
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