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December 28, 2001
1725 IST
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US-64 becomes NAV based from Jan 1

The government on Friday unveiled the UTI (Unit Trust of India) package with its flagship scheme US-64 going net asset value based from January 1 and announced that small investors could redeem upto 5000 units instead of the present 3000.

The financial restructuring package cleared by the newly constituted Cabinet Committee on Economic Reforms said UTI will make US-64 fully SEBI (Securities and Exchange Board of India) complaint from January 1 and fresh US-64 sales thereafter will be investment in a balanced fund.

As part of the package UTI board will be reconstituted and functions of Trustee and Asset Management in the country's largest mutual fund will be separated, economic affairs secretary C M Vasudev told reporters.

Vasudev said CCER, which met for the first time on Thursday also reviewed the implementation of labour and power sector reforms announced in the last Budget besides the recommendations of the Expenditure Reforms Commission, which has proposed downsizing of the government.

The CCER will also take up reform measures in the area of food, drugs, fertilisers and administered price mechanism of the petroleum ministry.

A group of ministers, headed by Finance Minister Yashwant Sinha, will assist the CCER.

Since it was the first meeting, CCER only made a review of these reform measures but took up in detail the financial sector reforms, which included clearance of the UTI package, Vasudev said.

Taking into account the developments in the capital markets, UTI proposed to provide additional comfort to all US-64 unit holders so that the impact of current low valuation of the flagship scheme is moderated to some extent.

UTI froze sale and repurchase of US-64 on July 1 for six months sending shockwaves among 2 million investors in the flagship scheme, which has an investment of about Rs 600 billion.

After this UTI fiasco, the government allowed sale and repurchase of US-64 of upto 3000 units to provide limited liquidity to small investors.

ALSO READ:
The UTI Crisis

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