M A I N   N E W S

UTI Chairman’s head rolls
Vassal is acting Chairman
Tribune News Service

New Delhi, July 4
The US-64 fiasco has claimed the head of the UTI Chairman with the government accepting its chief Mr P.S. Subramanyam’s resignation and appointing Mr K. G. Vassal as acting Chairman of the mutual fund.

“Subramanyam has resigned. We have accepted his resignation and senior most Executive Director of the UTI K. G. Vassal has been appointed as acting Chairman”, Union Finance Minister Yashwant Sinha told newspersons here today.

Sources in the Finance Ministry said Mr Subramanyam had submitted his resignation at the directive of the government. Mr Subramanyam, who had been heading the UTI since September 1998, had sent in resignation last night.

Reacting to the decision of the UTI on Monday to suspend redemption and sale of its US-64 scheme for six months, the Finance Minister had said that the government “normally lets financial institutions function on their own and has no desire to interfere in their day-to-day functioning. But the results that have come are distressing”.

Mr Sinha said the Finance Ministry would thoroughly “scrutinise” the decision of the country’s largest mutual fund while assuring that the interests of the 20 million investors were safeguarded.

The Minister of State for Finance, Mr Balasaheb Vikhe Patil, indicated that the government might soon undertake a “fact-finding” exercise into the whole affair and after all facts come out the government might consider restructuring of the UTI.

Mr Patil, however, did not categorically say that whether the government was considering a bail-out package for the mutual fund.

“The government may think of restructuring the fund company. All over the world mutual funds are private companies”, Mr Patil said.

In June 1999, the then Vajpayee government had pumped in Rs 3,300 crore into the ailing US-64 scheme through a revenue neutral arrangement.

The money was pumped in through an arrangement which involved the government picking up select PSU stocks in US-64’s portfolio, while the UTI in turn, reinvested the sum earned in government securities.

As a trust created under a special Act of Parliament, the UTI enjoys special status as compared to other mutual funds and institutions.