Unit Trust of India
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|Leo Puri Chairman and Managing Director|
Unit Trust of India is a financial organization in India, which was created by the UTI Act passed by the Parliament in 1963(30th Dec 1963) under the direction of Col. Akash Behl. He had fought very hard and intensely to get this organisation into reality. For more than two decades it remained the sole vehicle for investment in the capital market by the Indian citizens. In mid- 1980s public sector banks were allowed to open mutual funds. The real vibrancy and competition in the MF industry came with the setting up of the Regulator SEBI and its laying down the MF Regulations in 1993.UTI maintained its pre-eminent place till 2001, when a massive decline in the market indices and negative investor sentiments after the Ketan Parekh scam created doubts about the capacity of UTI to meet its obligations to the investors. This was further compounded by two factors; namely, its flagship and largest scheme US 64 was sold and re-purchased not at intrinsic NAV but at artificial price and its Assured Return Schemes had promised returns as high as 18% over a period going up to two decades.
As of 2010, UTI has 10 million investors.
Fearing a run on the institution and possible impact on the whole market Government came out with a rescue package and change of management in 2001.Subsequently, the UTI Act was repealed and the institution was bifurcated into two parts .UTI Mutual Fund was created as a SEBI registered fund like any other mutual fund. The assets and liabilities of schemes where Government had to come out with a bail-out package were taken over directly by the Government in a new entity called Specified Undertaking of UTI, SUUTI. SUUTI still holds around 11.66 percent stake in Axis Bank, 11.77 percent in ITC and 8.18 percent in L&T.
UTI Mutual Fund is promoted by the four of the largest Public Sector Financial Institutions as sponsors, viz., State Bank of India, Life Insurance Corporation of India, Bank of Baroda and Punjab National Bank with each of them presently holding a 18.5% stake in the paid up capital of UTI AMC. T Rowe Price Group Inc (TRP Group) through its wholly owned subsidiary T Rowe Price International Ltd. (TRP) has acquired a 26% stake in UTI Asset Management Company Limited (UTI AMC).
Certain reforms like improving the salary from PSU levels and effecting a VRS were carried out UTI lost its market dominance rapidly and by end of 2005,when the new share-holders actually paid the consideration money to Government its market share had come down to close to 10%!
A new board was constituted and a new management inducted. Systematic study of its problems role and functions was carried out with the help of a reputed international consultant. Fresh talent was recruited from the private market, organizational structure was changed to focus on newly emerging investor and distributor groups and massive changes in investor services and funds management carried out. Once again UTI has emerged as a serious player in the industry. Some of the funds have won famous awards, including the Best Infra Fund globally from Lipper. UTI has been able to benchmark its employee compensation to the best in the market, has introduced Performance Related Payouts and ESOPs.
The UTI Asset Management Company has its registered office at: UTI Tower, Gn Block, Bandra — Kurla Complex, Bandra (East), Mumbai - 400 051.It has over 70 schemes in domestic MF space and has the largest investor base of over 9 million in the whole industry. It is present in over 450 districts of the country and has 100 branches called UTI Financial Centres or UFCs. About 50% of the total IFAs in the industry work for UTI in distributing its products! India Posts, PSU Banks and all the large Private and Foreign Banks have started distributing UTI products. The total average Assets Under Management (AUM) for the month of June 2008 was Rs. 530 billion and it ranked fourth. In terms of equity AUM it ranked second and in terms of Equity and Balanced Schemes AUM put together it ranked FIRST in the industry. This measure indicates its revenue- earning capacity and its financial strength.
Besides running domestic MF Schemes UTI AMC is also a registered portfolio manager under the SEBI (Portfolio Managers) Regulations. It runs different portfolios for its HNI and Institutional clients. It is also running a Sharia Compliant portfolio for its Offshore clients. UTI tied up with Shinsei Bank of Japan to run a large size India-centric portfolio for Japanese investors.
For its international operations UTI has set up its 100% subsidiary, UTI International Limited, registered in Guernsey, Channel Islands. It has branches in London, Dubai and Bahrain. It has set up a Joint Venture with Shinsei Bank in Singapore. The JV has got its license and has started its operations.
In the area of alternate assets, UTI has a 100% subsidiary called UTI Ventures at Banglore This company runs two successful funds with large international investors being active participants. UTI has also launched a Private Equity Infrastructure Fund along with HSH Nord Bank of Germany and Shinsei Bank of Japan.
- "Businessworld - UTI: The Burden Of The Past". Businessworld.in. Retrieved 2011-02-02.
- "UTI Mutual Fund: Mutual Fund NAV, UTI MF Schemes". Indiainfoline.com. Retrieved 2011-02-02.
- "Invest in capital market for good return: UTI Chief". Investmoneyinindia.com. 2010-09-27. Retrieved 2011-02-02.
- "Govt plans stake sale in Axis Bank, ITC, L&T via new ETF".
- "UTI's revamp nears completion - Rediff.com Business". Business.rediff.com. 2010-01-21. Retrieved 2011-02-02.