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JPC tells UTI to speed up inquiry

The Joint Parliamentary Committee on Wednesday asked the Unit Trust of India to expedite its inquiry into its investment decisions, which resulted in the net asset value of the US-64 and other schemes turning negative.

Briefing reporters on the deposition by UTI chairman M Damodaran and other officials of the fund, JPC chairman Sriprakash Mani Tripathi said JPC members felt that the committee set up by the UTI to fix mala fide intentions in such investments was not progressing well.

''This slow approach won't do,'' the UTI was told.

The JPC's directive came even as the UTI maintained that despite the 'present general impression' about the trust, it was performing better than a large number of private sector mutual funds.

The UTI officials on Wednesday gave a presentation on its stand on the recommendations of the three committees of Dipak Parikh, Malegam and Tarapore.

The JPC was informed that the UTI board had virtually rejected the Malegam committee recommendation for distancing the government from the fund by selling off 60 per cent of the shareholdings to a strategic partner whose reputation could restore the investors' confidence in the fund. This was not desirable as the government would still have a 40 per cent holding without any rights.

The board had accepted 17 of the 19 recommendations of the Parikh Committee, 18 of the 22 of the Malegam Committee and most of the 44 suggestions of the Tarapore Committee, the JPC was informed.

On the suggestion that the equity-debt ratio of the fund which was 75-25 at present should be reversed, the UTI officials said the change would be gradual as any artificial change would result in losses.

The UTI board also rejected a suggestion for debarring institutional investors and restrict the schemes to small investors.

The UTI also informed the JPC that decision-making was being broad-based and institutionalised so that these were not 'hijacked' by any one person and losses avoided. However, provisions were being made to ensure that the new mechanism did not impede decision-making.

On the fund's investment in Reliance shares, Tripathi said auditing had already been completed and pre-investigations had been initiated.

UNI

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