Search the Internet          Tips  Sites: Finance, Investment

UTI will meet redemptions on 3 schemes: Sinha

The government on Thursday said that state-owned Unit Trust of India, the nation's biggest mutual fund manager, will be able to meet forthcoming redemptions for three of its assured return schemes.

Finance Minister Yashwant Sinha assured investors in Mumbai-based UTI on upcoming redemptions due on June 30.

"There should not be any worry about UTI's redemptions," Sinha told reporters. "We will fulfill all obligations as we have done in the past."

Sinha was referring to three close-ended funds -- the Institutional Investors Special Unit Scheme 1997, the Monthly Income Plan (MIP) 1997 (II) and the MIP 1995.

Analysts estimate the combined shortfall at between Rs 6.83 billion ($139 million) and Rs 10.50 billion mainly due to poor domestic stock market performance.

Sinha did not say how the UTI would meet redemptions but analysts say its development reserve fund is likely to be used to meet the payment obligations.

The 38-year-old UTI was racked by a financial crisis last July and was forced to suspend redemptions from its flagship US-64 fund as investors pulled out, mainly due to fears of a slash in redemption price and a cut in dividend.

The government stepped in to help the US-64 scheme, bridging the gap between the current net asset value and the higher administered price of US-64.

Created by an act of Parliament in 1964, UTI manages close to half the domestic fund industry's assets which are estimated at around $20 billion.

ALSO READ:
The UTI Crisis
The Rediff Budget Special
Money

Tell us what you think of this report