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The government has decided on 31st August 2002, to split the Unit Trust of India into UTI-I and UTI-II, extend tax sops to US-64 investors and provide support to US-64 and assured return schemes (ARS). UTI after bifurcation will thus consist of two parts — sick and the healthy.
UTI-I will comprise US-64 and ARSs & will be managed by government-appointed administrator and a team of advisers nominated by the government. The current shortfall in case of US-64 scheme has been estimated at Rs 6,000 crore. In respect of ARS, the current shortfall is likely to be Rs 8,561 crore. The government would take on all the liabilities arising out of UTI -I.
The government will provide necessary monetary support to the US-64 scheme & plan to provide certain tax concessions to US-64 investors with a view to prompting them to remain invested with the scheme. The tax sops will include exemption from dividend tax and capital gains tax.On the assured returns schemes, the Cabinet has also approved interest reset on the assured returns scheme. It has also authorised the government to consider foreclosure where possible. Both these measures would be considered in consultation with Sebi.
UTI-II, which will manage other net asset value (NAV) based schemes, will ultimately be privatised. UTI-II would be a “pure mutual fund” with a professional team running it.privatisation of UTI II would take place after its valuation had improved under professional fund managers.
This step of government was long overdue & will assist investors who have put faith & money in UTI.
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