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3 UTI schemes to be SEBI-compliant

Ashok Jainani

MUMBAI, May 28

THREE of Unit Trust of India's (UTI) old schemes will soon take on a new avatar. The schemes, which were launched before the Securities and Exchange Board of India and its mutual funds regulations were framed, are being converted to bring them in conform ity to the SEBI regulations.

The Unit Linked Insurance Plan (ULIP), College & Career Fund (CCF) and the scheme for Charitable & Religious Trusts (CRTS) with assets over Rs. 6,000 crores under management would be made SEBI-compliant from July 1. With this, UTI would bring almost the entire range of all of its schemes, numbering 70, under SEBI regulations save the Unit Scheme-1964 (US-64).

In the new format, the schemes would move from the administered pricing mechanism to net asset value (NAV)-based pricing, the UTI Executive Director, Mr. B.G. Daga, told Business Line.

Earlier, the sale and repurchase prices were fixed on monthly basis by the UTI management considering the income accruals and dividend yields. The open-end schemes would now declare weekly NAV-based sale and repurchase price, Mr. Daga said.

Another change that would accompany these is with regard to restrictions on investments. The SEBI regulations prohibit investments in certain instruments such as term deposits. UTI has already started implementing the changes as fresh investments under t he schemes are made keeping in view the SEBI regulations.

All the basic features such as target amount, insurance cover and tax treatment of the schemes would remain same, only certain operational aspects are likely to change when the schemes become SEBI-compliant.

The schemes would become SEBI-compliant after the market regulator clears the revised offer documents incorporating provisions of the regulations. The minimum target amount under UTI's popular scheme ULIP is being raised from Rs. 6,000 to Rs. 15,000 keep ing the maximum target amount same at Rs. 75,000.

UTI has been incorporating provisions of SEBI regulations in all its schemes in the past as far as practical. US-64 would also soon be made SEBI-compliant with NAV-based prices as per the recommendations of Deepak Parekh Committee.