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Govt view on UTI revamp after Malegham report

Shaji Vikraman

NEW DELHI, July 2

THE Government will take a view on the restructuring of the Unit Trust of India (UTI) shortly after the final report of the Corporate Repositioning Committee, headed by Mr Malegham, submits its report.

The committee is close to wrapping up its recommendations.

During its earlier meetings, the committee had indeed discussed the issue of a line of credit from the Government to help the UTI, which is going through a tough time, according to officials in the Trust.

However, given the prevailing mood in the Government and the reluctance of the institutions to pump in more funds, this suggestion may not finally find mention in the report, they said.

This is because of the bitter experience that the Government had after pumping in Rs 3,300 crore in 1999 under a bail-out scheme -- the Special Unit Scheme '99 (SUS '99).

The scheme which involved transferring of a large number of PSU stocks held by US 64 to its portfolio is now valued at just over Rs 1,100 crore. The scheme which has a maturity of five years is now well into its third year and Government officials are sa rcastically talking of an SUS 11, to replace the first scheme.

Earlier during the year, the Finance Ministry had written to the UTI, suggesting that the Trust should implement at least those recommendations which do not call for amendments to the UTI Act.

These included moving to a net asset value (NAV) based pricing mode. The UTI then wrote back to the Government saying that if this was done, it would hurt the interest of millions of unitholders of the scheme.

The UTI Act has to be amended to create an asset management company and also to increase the strength of the board, both of which were recommended by the Deepak Parekh Committee. However, this will be a long drawn affair, with Parliamentary approval call ed for.