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UTI meet inconclusive; board to meet again soon

Priya Ganapati in Bombay

The board of trustees of the Unit Trust of India, India's biggest and oldest mutual fund organisation, met on Monday to discuss the various alternatives that would give small investors in US-64 an exit option.

Small investors have been hit by UTI's controversial decision, taken on July 2, to freeze the sale and repurchase of US-64 units for up to six months. US-64 is one of UTI's most popular mutual fund schemes and has 20 million investors.

However, on Monday the board did not zero in on any recommendation. Instead it has asked for more information before it could choose any of the alternatives placed before it.

The board is set to meet again in a couple of days to continue the discussions.

UTI's decision to freeze the sale and repurchase of US-64 units has come under flak and has lead to the resignation of former UTI chairman, P S Subramanyam. K G Vassal is now the acting chief at UTI.

The institution has also come under fire from the finance ministry for its decision on US-64 which has directed its board to look for ways out of the US-64 mess.

In an emergency meeting on Friday, the UTI board decided to work on alternative exit options for the small investors. UTI brass has been working over the weekend to trump up various options that can be offered at this stage.

Once, the board of trustees ratifies a package, it will be informally submitted to the finance ministry for approval and only then offered to the unit holders.

"The government has expressed a desire to approve of the package that we decide upon. Hence, we will refer the decision we have made to them," B G Daga, executive director of UTI said.

The process is expected to be completed by the end of next week.

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