How UTI crisis unfolded: Former Sebi chairman UK Sinha revists the drama

The decision to stop the encashment of US-64 unit was a step that shocked investors and the entire capital market. Former SEBI chairman U K Sinha revisits the drama in his new book

Unit Scheme-1964 (US-64) was the biggest and most popular scheme of UTI. It was sold and repurchased from unit holders not based on the correct inherent value of the portfolio (net asset value) but on artificial prices fixed by the management. A practice that accentuated this problem was that from 1993-94, when UTI started distributing a dividend to unit holders that was much more than the actual income of the scheme during the year. In some years, a dividend as high as 28 per cent was paid, whereas the actual income during the year was less than 10 per cent.