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July 5, 2001
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Money > Business Headlines > Report July 5, 2001 |
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Deepak Parekh panel members blast UTIBS Banking Bureau Members of the Deepak Parekh Committee which charted out the revival course for US-64 in 1999 have blasted the Unit Trust of India for its failure to implement its recommendations. Business Standard spoke to Jagdish Capoor, former Reserve Bank of India deputy governor, who also had a stint at UTI as the institution's chief, and S H Khan, former IDBI chairman, in the wake of the new crisis that has engulfed the fund. The other members of the committee were Arvind Virmani, Maya Shankar Verma and Rajendra P Chitale. This is what they say: Capoor: The basic error committed is that UTI should have taken early steps to move US-64 towards net asset value. When there is heavy redemptions and sales are low, I guess there is no other option but to put a moratorium on the scheme which it has done. But there can be some exit routes for the small investors. May be, it can have a cut-off limit for the exit. Unless the market looks up, it will be a difficult time for UTI. It must shift to NAV at the earliest. S H Khan: I have no clear idea what types of investments UTI has made. The Deepak Parekh Committee had suggested shifting the focus from equity to debt. The weightage of equity, which was around 70 per cent was advised to be brought down to 40 per cent. UTI has switched part of its portfolio from commodity stock to tech stocks. But it has not brought down its equity exposure in a big way, which it should have done. When the market was high, UTI should have done that. That was also the time to switch to NAV for US-64. My surmise is that when the market went up, UTI became complacent. The solution now is to bite the bullet and link it to NAV. The panel had given a three-year time frame. It could have done that as late as now. The long-term investors may not exit (despite declaration of NAV). The head of the institution has to take the moral responsibility for its failure. The UTI chairman has done that. Powered by YOU MAY ALSO WANT TO READ:
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