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UTI should be brought under SEBI ambit within months

The Economic Survey for 2001-02 on Tuesday said the beleagured Unit Trust of India should be brought under the ambit of Sebi within the coming months, in view of significant loss in its market share in the last five years due to repeated problems in the US-64 scheme owing to administered pricing.

"In the coming months, further efforts aimed at turning UTI into a normal SEBI-regulated mutual fund, are expected," the survey said.

The pre-Budget document said the analysis of trends in the market share of mutual funds revealed that UTI suffered significant loss in market share from 85 per cent in 1996 to 50 per cent in 2001.

"UTI's US-64 scheme has faced repeated problems owing to administrative setting of entry/exit prices," it said.

To protect investors, government interventions became necessary and these interventions had been accompanied by structural improvements also, it added.

"The performance of UTI was badly affected by the down trend in the stock market," it said pointing out that during the first nine-months this fiscal, the fund outflow from it exceeded inflows by Rs 51.51 billion whereas during the same period of the previous year, inflows exceeded outflows by Rs 4.80 billion.

During April-December 2001, the UTI accounted for a "modest" share of 3.7 per cent as 14.8 per cent in the same period a year ago, the survey said.

"Redemptions/repurchases exceeded the gross resource mobilisation in the case of UTI by more than two times during the first nine months, resulting in negative net resource mobilisation," it said.

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