Confidence betrayed

Sir, - The Unit Trust of India Social Audit Committee, set up to find how UTI had fulfilled its objectives during the first 30 years of its existence, submitted its report in 1994.

The panel found that the organisation enjoyed the confidence of millions of investors. It had popularised the concept of saving and investment among the people through its trained agents.

With a dedicated staff of 2,300, it was handling over Rs. 55,000 crores.

The organisation is a shambles today having betrayed its trusting investors.

The main reasons are: (a) Lack of transparency in US- 64. When the UTI ceased to be a monopoly, with several other mutual funds in the field, it should have declared NAV, like others. (b) The US-64 was a `khazana' built over the years, and was apparently diluted by cross- subsidising UTI's less remunerative products. (c) The RBI as the parent organisation refused to allow the UTI to operate in the new environment of market-oriented salaries and organisational flexibility. Consequent managerial arthritis led to the UTI's near collapse. (d) The unhealthy practice of political consideration in the appointment of bank chairmen in the 1970s and 80s was allowed to enter into UTI. Politicians and backroom boys in the Finance Ministry, who enjoyed power without accountability, substantially contributed to its decline.

The joke circulating in financial circle is that UTI-made investments at fancy prices even in dot.com companies which had nothing but a dot.

The investing public should not take at face value what politicians are saying about the UTI. The organisation has forfeited its trust with the investing public, particularly the law-abiding citizens.

M. R. Pai,

Member, UTI Social Audit

Committee (1994), Mumbai

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