UTI assured schemes' shortfall Rs 2,632 cr, DRF just Rs 60 cr

The development reserve fund of Unit Trust of India (UTI), which has guaranteed the assured return schemes of the trust, has liquid funds of just about Rs 60 crore.  The projected shortfall, however, on six assured return funds of the fund including five monthly income plans (MIPs) and one institutional investors' fund maturing in the current calendar year is a whopping Rs 2,632 crore.

According to UTI, the funds available in the DRF of the Trust was estimated at Rs 1,680 crore as on December-end 2001. The DRF corpus was estimated to increase to around Rs 1,800 crore by June 30, 2002. The DRF had investments in fixed assets of Rs 666 crore and in financial assets of Rs 956 crore.

The trust has hence sought the finance ministry's support for meeting the redemption pressure in the case of MIPs, Expecting no noticeable improvement in the liquidity of the DRF during the current financial year which ends June 30, 2002, UTI has said the government should help find a quick solution to the imminent liquidity problem.

While SBI, IDBI and LIC contributed almost 80 per cent to the initial capital of Rs 5 crore of the trust, the three institutions have told the trust that they were not the sponsors of UTI as defined in the Sebi Mutual Fund Regulations 1996. The sponsoring institutions, according to Sebi, are supposed to make good the shortfall in the assured return schemes.

IDBI has told UTI that there was no legal obligation on it to make any contribution towards the shortfall in question. Even SBI has written to the trust that it has never guaranteed or assured any schemes of UTI under Sebi Mutual Fund.

LIC has said that as an initial contributor to US 64, it did not incur any liability either under UTI Act or under any applicable Sebi regulations. It further said that UTI was not established by LIC alone and therefore the question of it being a sponsoring institution of UTI and hence being liable to meet any part of the shortfall in any assured return scheme did not arise.