UTI MF to settle fraud claims

The UTI Mutual fund today said that it would immidiately compensate the 1,600 customers, whose cheques were fraudulently intercepted. Reacting to the Supreme Court ruling, DSR Murthy, director, UTI Mutual said that the fund house is accountable for non-delivery of cheques of maturity amount to its unit holders and will immidiately pay out the money to the investors.

"We have decided to make immediate payments and deal with the banks later. UTI has always taken this step, whenever there were similar incidents in the past," he said. "We are also encouraging customers to make payments through electronic credit system (ECS) and direct credit, there by reducing the dependency on mail deliveries," he added.

The court had held that "there was negligence on the part of the UTI". It rejected the fund house's contention that there was no deficiency of service or negligence on its part upholding the District Consumer Forum rulings that UTI was bound to pay the amount to the unit holders.

The consumer forums had held that post offices were agents of the UTI and therefore the loss had to be dealt by the mutual fund. According to the UTI spokesperson, "there is nothing one can do about the improper functioning of the postoffices in the country. We have tied up distribution network with them, but we cannot help in changing the infrastructural problems that they face."