Left, industry assail UTI decision

By Our Special Correspondent

NEW DELHI, JULY 3. In a rare occurrence, both the industry and the Left parties have reacted sharply to UTI's decision to suspend trading in US-64 units. While the Left criticised the move on behalf of the middle class which has always viewed UTI-64 as a dependable financial anchor, the industry felt that many large companies which had invested sizeable chunks of their reserves in UTI's premier fund could now find themselves in trouble.

Describing the decision as a ``breach of faith and fiduciary responsibility, no different from a bank suddenly deciding to shut its windows, leaving depositors in the lurch,'' the Confederation of Indian Industry (CII) president, Mr. Sanjiv Goenka, said the ban went against the complete attractiveness of the scheme - ready and instant liquidity for small investors and corporate treasuries. Several large corporates would be seriously affected by the decision and this could depress market sentiment further. Mr. Goenka traced the genesis of the problem to UTI's refusal to shift to a NAV-based pricing system. By failing to do so, UTI had eroded its reserves by paying a high re-purchase price.

The Federation of Indian Chambers of Commerce and Industry (FICCI) said such a knee-jerk reaction could further aggravate the situation. It hoped the UTI would review the US-64 scheme and restore sale and purchase at the earliest opportunity.

Speaking on behalf of the small investors, the CPI(M) called upon the Government to protect the interests of millions of small investors who had put their savings in the US-64 scheme. Reports about the financial difficulty facing UTI had made it imperative for the Government to intervene and restore confidence in the scheme.

At the same time, a thorough probe was required to see how UTI had conducted its affairs with regard to US-64 in the stock market and its failure to rectify its earlier wrong approach with regard to speculative investments.

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Section  : National
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