Task cut out for new UTI chief

By Our Special Correspondent

NEW DELHI, JULY 15. The Government has appointed Mr. M. Damodaran as the new Chairman of the Unit Trust of India. The former chairman, Mr. P. S. Subrahmanyam, resigned on July 4 after the announcement of the annual results on July 2. In between, Mr. K. G. Vassal of the UTI was asked to take temporary charge of the organisation.

Mr. Damodaran, an IAS officer currently posted as Officer on Special Duty in the Reserve Bank, has been appointed for a period of one year. Earlier, he had a long stint as Joint Secretary in the Banking Division of the Finance Ministry and was closely associated with the public sector banks as well as financial institutions.

His first task would be to work out a special package for US-64 investors on instructions from the Finance Ministry, which has expressed reservations about the freeze on the scheme.

The UTI Board, over the last few days, has been holding consultations with Finance Ministry officials as well as with banks and financial institutions for a possible line of credit to redeem the US-64 units at a ``reasonable'' price. However, the Ministry is unlikely to extend any budgetary resources as of now while banks and financial institutions are reportedly reluctant to lend without foolproof collateral.

Mr. Damodaran would also have to facilitate a probe announced by the Finance Minister, Mr. Yashwant Sinha, into the UTI's investment patterns over the past several years and whether there was any insider trading during April and May this year when heavy redemptions took place at a high price of Rs. 14.25 per unit. Many private corporate groups as well as some public sector undertakings took advantage of the high price while many small investors now find their investments blocked because of the six- month freeze. Moreover, any exit option likely to be offered by the UTI is expected to be much below the Rs. 14.25 a unit offered in April and May.

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