Unit Trust of India's move to slash the annual rate of return for 2001-02 interest to a mere five per cent for its Monthly Income Plan (MIP) '95(I) and MIP '96 (IV) seems to have upset investors.
In fact, UTI has been flooded with several complaints from investors regarding its latest move. A large of number of retired individuals normally invest in these assured return schemes.
Reacting to the development, S K Basu, executive director said: "It is not easy to maintain a high return for a long period of time. Further, total returns in both these schemes are much higher than other MF schemes." Basu further added that MIP '95(I) has given a 12.47 per cent payout (considering the current year) on an annualised basis while MIP '96 (IV) has given a payout of 12.99 per cent on an annualised basis. Moreover, any appreciation at the end of the scheme would also be distributed to unit-holders.
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UTI had launched MIP '95(I) in July 1995 with a corpus of Rs 488.09 crore as on June 2000. Of this, Rs 138.3 crore was under cumulative option and Rs 349.79 under monthly option. But the corpus of the scheme stood at Rs 481.17 crore as on May 2, 2001. This seven-year plan offered an annual rate of interest of 13 per cent under monthly option and 13.80 per cent under cumulative option.
For the subsequent two years, the annual rate was revised to 14 per cent under and 14.93 per cent under the cumulative option. But since then annual rate of return was revised downward in line with the general fall in interest rates. UTI also reduced the annual rates to 12.5 per cent in 1998-99 to 10.75 per cent in 1999-00 and 9 per cent in 2000-01 under the monthly option.
MIP '96 (IV) was launched in November 1996 and had a corpus of 758.23 crore as on June 2000. Of this, 259.73 crore was under cumulative option and Rs 498.5 under the monthly option. The scheme offered 15 per cent under the monthly option and 16.08 per cent under cumulative option for the first two years. But the rates were subsequently slashed and were 9.25 per cent under monthly option and 9.65 per cent under cumulative option in 2000-01. The corpus of the scheme stood at Rs 748.34 crore as on May 2, 2001.