Govt to compensate UTI sponsors’ losses

In a significant step to revitalise the UTI, the government is considering providing compensation for losses in different schemes of the tru...

In a significant step to revitalise the UTI, the government is considering providing compensation for losses in different schemes of the trust to the new sponsors under the proposed restructuring plan.

A senior finance ministry official said that the step is aimed at providing incentives to the new sponsors of the UTI for joining the new set up. He added that considering the current health of the Trust, creation of a new sponsoring company will be very difficult in the absence of any incentive.

Damodaran gets extension

Mumbai: The government has given an extension to UTI chairman M Damodaran. ‘I’ve received the letter from the government’, he said. The Finance Ministry was in favour of extending his tenure by two years.

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Damodaran, who is originally from the IAS cadre, was given a one-year tenure as Chairman of UTI last year. At that time, the appointment was cleared for a limited period to ensure the transition of the UTI into a corporatised entity during the period.The proposed structural changes for UTI entail putting in place a three-tier structure to comply with the Sebi norms for mutual funds. (ENS)

The official said that in the beginning, initial capital contributors of the Trust, IDBI, LIC and SBI are likely to be roped in as the new sponsors. He added that the issue has already been discussed by finance minster Jaswant Singh and a final decision on the modes for compensation of losses in different schemes of UTI is expected to be concretised in consultation with the concerned parties.

The mutual fund behemoth is currently facing major shortfalls in assured-return MIPs and the biggest mutual fund scheme, Unit Scheme ’64.

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