UTI steps to protect investors

By Our Special Correspondent

MUMBAI, JULY 15. Unit Trust of India (UTI) today announced measures to protect the interests of small unitholders in Unit Scheme 1964 (US-64) and to simultaneously pave the way for migration of the Scheme from administered pricing to Net Asset Value (NAV) based pricing.

The Board of Trustees of UTI at its meeting held here, have approved that all unitholders as on June 30, 2001 may offer for repurchase upto 3000 units per unitholder at any time during the period from August 1, 2001 to May 31, 2003 at the price indicated here under or the NAV, whichever is higher.

US 64 will fully reopen for fresh sales and repurchases at NAV based prices with effect from January 1, 2002. Thereafter, for 3000 units per unitholder, the repurchase price would be the higher of the applicable repurchase price or the then prevailing NAV based repurchase price. These 3000 units per unitholder will also be entitled to dividend, as may be declared.

Addressing a press conference here, the newly appointed Chairman of UTI, Mr. M. Damodaran said: ``We have put together an excellent scheme and I expect a large section of investors to stay with US-64.''

Mr. B. G. Daga, Executive Director, UTI said: ``It will take care of large number of investors. We are sure with this support there will not be much repurchase.'' He also clarified that repurchase above 3000 units will be NAV priced from January 2002. 54 per cent of the investors in US-64 have less than 3000 units each.

The deficit, if any, between the NAV and the applicable repurchase price will be met and so funded that this will prevent any NAV dilution on account of the measures taken for unitholders with less than 3000 units.

Adequate liquidity arrangements have been made to ensure that any funds needed for redemption will be available without UTI having to resort to large scale sale of its investments in the market.

Mr. Daga also added that the Government of India has agreed to stand fully behind UTI to support implementation of this bail out scheme for small investors.

Meanwhile Mr. M. Damodaran has taken over as Chairman of UTI with effect from today. He belongs to the IAS cadre. He was officer on special duty with the Reserve Bank of India dealing primarily with the restructuring of the identified weak public sector banks prior to this appointment.

Earlier he was joint secretary (Banking Division), Ministry of Finance for five years. The appointment is for a period of one year.

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