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UTI returns declined due to fall in interest rate, market index: Sinha

The government said on Tuesday that a three-member high level committee will enquire into investment decisions of Unit Trust of India and justified the lower dividends paid by the country's largest mutual fund on account of falling interest rates and market indices.

Finance Minister Yashwant Sinha told the Rajya Sabha that US-64 scheme, which offered dividends of 13.5 per cent in 1998-99 and 13.75 per cent in 1999-2000, provided only 10 per cent dividend in 2000-01.

"There has been a general decline in the interest rates in the last few years. The stock market indices have also declined and experienced volatility. The returns on capital market instruments have fallen over the last few years," he said.

"Further, the Deepak Parekh committee had observed that dividend policy for US-64 should be in line with market related returns from instruments of comparable risk and maturity," Sinha added.

Minister of State for Finance Gingee N Ramachandran said UTI's monthly income plan schemes have provided better returns to investors compared to similar instruments despite decline in interest rates in the post liberalisation era.

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