Search the Internet          Tips  Sites: Finance, Investment

Small UTI investors adopt wait-&-watch policy

BS Banking Bureau

Small investors did not rush to sell their units on the first day of US-64 redemptions with hardly any queues at the Unit Trust of India counters in Bombay. The management, however, was out in full strength to meet any contingency and assuage the feelings of the irate investors. In the morning, there were more reporters covering the event than investors coming for redemptions! Instead of picking up redemption forms, the investors were busy talking to newsmen and being interviewed by TV channels.

Even those investors who had come to the UTI offices were not keen on redeeming the units. Some of them even went back without asking for redemption forms. It would take about ten working days to get the money after one fills in the form. Some of the unit holders wanted to wait for the dividend next year before taking a decision while most of them said they had lost faith in UTI and the government.

And yet there is no urge to go in for redemptions as there are not many alternative investment options.

Said Dipchand Javeri, a senior citizen who had purchased the units at Rs 10 in 1991, "I have not made up my mind on whether to get out of the scheme even though I don't trust UTI any more. I had invested in the scheme as I thought it was a safe investment."

Niranjana K Seth, who had come to redeem her 300 units, said: "I will decide on whether to redeem my investment in other UTI schemes Thursday. I will invest the money in the senior citizen scheme in a bank. At least, I will not have to worry about my money." Another investor Shyam T, who holds 3,000 units, filed for redemption of 1,500 units today. "In the last 37 years, the scheme has offered dividend ranging from 6 to 26 per cent. At this juncture, one has to show some sympathy for the institution, which has given an average of 15 per cent dividend.

"The reason I sold half of my investments was to create a buffer against any future problems. Also the scheme is now giving an assured tax-free return of around 12 per cent for the next two years, which is not given by anybody else. I don't know where to invest my money if I get out of UTI," he pointed out. However, there were other dissatisfied investors who spoke against the repurchase price of Rs 10. Said HV Batale, an agent of UTI and also an investor, "I had recommended the scheme to other people because of its liquidity and the tax-free status offered by the scheme. I don't know how to face my clients now."

Some investors said it would be better to sell off the units and take home the money right now. "At least, I will have something to take back for my grandchildren. We had invested in the Children's Growth Fund too thinking that by the time our children enter college we would be able to pay off their fees through it. Our children have grown up but not the fund," quips a senior citizen.

KR Shivshankar, another investor who had purchased 7,000 units at Rs 13.80 per unit, was unhappy with the redemption package. "The government, the Reserve Bank of India and the Securities and Exchange Board of India do not have any sanctity left. The plan to increase the repurchase price by 10 paise every month makes us look like beggars. I will redeem my units depending on my contingency."

Powered by

YOU MAY ALSO WANT TO READ:
The UTI Crisis
The Rediff-Business Standard Special
The Budget 2001-2002 Special
Money
Business News

Tell us what you think of this report