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UTI to be Sebi-compliant; no more assured returns

The Unit Trust of India on Monday said that it will not launch any more assured return schemes like US-64, and the mutual fund will be made fully Securities and Exchange Board of India-compliant by December end by legislative changes in UTI Act.

"UTI will not launch any more assured return schemes. The intention is to offer pure mutual fund schemes to pure mutual fund investors," UTI Chairman M Damodaran told reporters after a meeting with Economic Affairs Secretary C M Vasudev in New Delhi.

"The intention is to offer pure mutual fund schemes to pure mutual fund investors," he said.

He allayed fears that there was any redemption pressure for the closed ended scheme maturing in the coming months.

"When the date matures, there will be no shortfalls in closed ended schemes," the UTI chief said.

Damodaran said Monday's discussion with finance ministry officials was mainly on statutory changes to reform and restructure the country's largest mutual fund through legislative changes in the UTI Act.

"The exercise we attempted is on how to make the UTI a structurally SEBI-compliant by December 31, 2002. We looked at several options," he said.

According to Sebi norms, a mutual fund must have a three-tier structure, comprising a sponsor, a trustee and an asset management company.

UTI would be converted into an AMC as recommended by the Malegam and Tarapore committees, Damodaran said.

"Trifurcation of functions is what is intended and not the trifurcation of the fund," he said.

With these initiatives, Damodaran hoped that UTI would retain the current 50 per cent market share in coming years.

It was also looking at investment in foreign government papers.

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