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UTI to make schemes SEBI-compliant - Views on News from Equitymaster
 
 
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  • Aug 31, 1999

    UTI to make schemes SEBI-compliant

    According to news reports, Unit Trust of India's (UTI) schemes will fall in line with the Securities and Exchange Board of India (SEBI) regulations.

    UTI, with assets in excess of Rs 605 bn as on 31st July 1999, is India's largest mutual fund (MF). It accounts for 76% of India's MF segment. UTI commenced operations in 1964, with the launch of Unit Scheme 1964 (US-64), its flagship scheme. Unlike other MFs, it is governed by the Unit Trust of India Act, 1964, and does not come under the purview of SEBI regulations..

    UTI used to disclose NAVs and portfolio of its schemes in an ad-hoc manner, which made investors suspicious of its intentions. Even US-64 portfolio, (UTI's flagship scheme with assets in excess of Rs 160 bn) was not disclosed often enough, which was very surprising given US-64 large investor base. If US-64 investors had a chance to review the portfolio regularly many discerning investors would have exited the scheme much before the US-64's portfolio erosion details came to light.

    But these schemes are expected to come under SEBI's purview by September 1999. UTI claims that its 56 schemes that were launched after SEBI became operational, are more or less SEBI-compliant, and now only have to be declared as such.

    UTI's move to make its schemes SEBI-compliant are in line with the Deepak Parekh committee recommendations to boost UTI's image by making it more investor-friendly and transparent. In addition to this, the committee had also recommended that US-64's market price should be linked to its Net Asset Value (NAV). If and when these recommendations are implemented, UTI's investors will soon be on par with investors in other private mutual fund schemes, who only have to make a phone call to find out the latest NAVs and portfolios of their schemes.

     

     

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