On Sunday UTI MF celebrated its Golden Jubilee in Mumbai. The function, celebrating the anniversary of a quasi-government mutual fund, would have been an innocuous take-note item in the newspapers. It didn’t for two reasons. First, finance minister P Chidambaram was there to deliver a speech, which made the occasion newsworthy.
The second is more peculiar. UTI MF has not been around for 50 years or even anything close to it. The company was set up in January, 2003, and has completed only eleven years since.
The company, however, has had a difficult parentage. It is one of the two offspring of UTI that was set up by Parliament in 1964. Had that UTI been around, now a 50-year bash would have been appropriate. But in 2001, when the stock market scam broke out, it took this company down with it. I am not saying this as a rhetorical point. The UTI Act was repealed in Parliament and the institution was bifurcated. Of these, the Specified Undertaking of UTI took upon itself all the residual liabilities of the parent company. So, any claims coming from anywhere were to be addressed to this company. The liabilities of the infamous US 64, for instance, was its responsibility and so the Government of India kept an open-ended financing scheme operational till all the demands against India’s first mutual fund was extinguished. The same happened to the entities which had been carved out of UTI, like Axis Bank. SUUTI still holds 27 per cent shares of Axis Bank, which too renamed itself to clear any association with the UTI brand.
The bigger problem created by the jubilee celebrations is, however, elsewhere. The government, in 2003, handed out rather spartan returns to those who lost money with US 64 and the other assured-returns schemes, after investing in them with the belief that those were sovereign-backed. If UTI MF is taking over the old mantle, what if some of those, who lost money, then decide they too want their cases opened afresh.
Subhomoy is a deputy editor based in New Delhi.
subhomoy.bhattacharjee@expressindia.com
