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UTI gift to child in jeopardy

Our Bureau

MUMBAI, Dec. 14

THE falling interest rates and turbulence in the equity markets are likely to take a toll on one more assured returns scheme of UTI.

Senior UTI officials said that the management is trying to devise a strategy to turn around the Children's Gift Growth Fund (CGGF). This would bring it back on line with expected returns as per the terms of the scheme. Else, they may have to suspend fres h sales under the scheme.

For the year ended June 2000, CGGF-86 has negative reserves of Rs 551.77 crore which have grown from the previous year's negative reserves of Rs 278.84 crore, as per the annual report. The latest variant, CGGF-99 has accumulated negative reserves of Rs 7 .32 crore.

CGGF, with investors' assets worth over Rs 3,797 crore under management, was originally launched in 1986 and revised in 1999, as an irrevocable gift to a child, had assumed returns to grow at a pre-determined rate over the tenure of the scheme. The schem e envisaged returns in the range of 14.5-16 per cent depending upon the age of child at the time of entry.

For the year ended June 2000, CGGF provided Rs 80.67 crore towards doubtful investments/income. After considering profit on sale of investments of Rs 272 crore and interest/dividend income of Rs 364 crore, total income during the year was Rs 680 crore.