UTI Mutual to double ULIP investment limit

UTI Mutual Fund is planning to double the investment limit in its Unit Link Insurance Plan 1971, popularly known as ULIP. ULIP is among few mutual funds schemes, which offers tax benefits under Section 88.

The mother of unit linked insurance products in India, ULIP currently have an asset base of around Rs 4,000 crore, one of the largest in MF industry. The number of accounts under ULIP is around 8.2 lakh.

Ashutosh Bishnoi, chief marketing officer of UTI MF, told Business Standard that the fund is more than doubling the investment limit from the present level of Rs 2 lakh to Rs 5 lakh.

Consequently the tax benefit for individuals from ULIP will go up to Rs 10, 000 from present level of Rs 4,000 per annum. UTI has already got the approval from LIC for increasing the investment limit in ULIP.

"We have submitted the proposal to Sebi after getting the LIC approval. UTI is expecting Sebi nod soon regarding this," he said.

Incidentally, the former Unit Trust of India launched ULIP in 1971 in association with LIC. ULIP holders fall under group insurance of LIC.

"The increase of investment limit of ULIP could be boon for the individual tax prayers. The amount of tax rebate available is Rs 4,000 per annum from ULIP. It will increase to Rs 10,000 per annum," he said.

Bishnoi argued that ULIP scores over unit link insurance products, offered by the insurance companies on two grounds, track record of 33 years and no entry load for the investors.

The net asset value of ULIP is currently Rs 14.36. Commenting on the different schemes of UTI MF, Bishnoi said that UTI MF will soon going to have a balance fund.

US 95 will be renamed UTI Balanced Fund. Incidentally, UTI recently merged its Growing Corpus Growing Income plan with US 95.

"US 95 is one of the best performed equity scheme in India, so we have decided to rename it as a balance fund, the name that new generation investors like," he added.

Meanwhile, UTI MF could well turn the tide in December. After recording a net outflow for past few months, UTI MF has so far booked a net inflow of a huge Rs 500 crore.

The UTI MF asset base has grown from Rs 20,200 crore in November 30 to Rs 20,700 crore in December 14.

"UTI is getting lot of investors too. UTI MF has registered 6 lakh new accounts across schemes in last nine months from April to December," UTI MF CMO said.

When contacted, the chairman of Association of Mutual Fund in India, A P Kurien said that AMFI is optimistic about a positive inflow in the MF industry in December.