New Delhi, July 9
The Union Finance Minister, Mr Yashwant Sinha, today held the top brass of the Unit Trust of India (UTI) responsible for the US-64 fiasco but said an alternative package to restore investors’ confidence will be ready within a week.

Giving a clean chit to the Finance Ministry in the slippage of the fund, Mr Sinha, however, said that though constitutionally the buck stop at him he could not be held responsible for the fiasco.

An independent and comprehensive probe, perhaps by the CBI, into charges of inside trading and poor portfolio management will be ordered soon after the Board of the UTI comes out with an alternative package for US-64 investors, he said adding that the lifting of freeze on the redemptions of US-64 units could be an important part of the package.

“The Board of UTI is expected to come out with the package within a week’s time and a lift on the freeze of sale and repurchase of US 64 could constitute an important part of the package”, Mr Sinha told newspersons here today. Seeking to clarify that UTI Chairman, P.S. Subramanyam had not been deliberately made a scapegoat for the whole fiasco, Mr Sinha said UTI’s management was responsible for keeping its Board of Trustees informed and it was also “ expected to intimate the Finance Ministry if there were any serious concerns with regard to UTI investors of it there is any systemic risk”.

During the current calendar year, the Finance Ministry has repeatedly asked the UTI to intimate what is the financial health of all its schemes, including US-64,the Finance Minister said.

“In all its communications to the government, the UTI had never hinted anything about a possible freeze of redemptions”, he said. It was as late as June 30, that a letter was dispatched by the UTI to the Finance Ministry stating that the Board was considering temporary freezing of redemptions at its July 2 meeting.

“With June 30 being a Saturday, there was very little for the Ministry to examine the issue in its entirity and propose alternative solutions. Postponing the Board of trustees meeting and non-declaration of annual results was an alternative, but this was not advisable as it would have sent wrong signals to the bourses”, Mr Sinha said. The primary priority of the Ministry of Finance at this juncture is to the restore the confidence of the investors, particularly the small investors whose liquidity position has been severely jolted, the Finance Minister said.

“Once a solution for US-64 is found out, we propose to have full enquiry on reports of inside trading and investment decisions of the UTI”, he said.

He, however, indicated that a bail-out package was unlikely.

On asked whether the Finance Ministry had any specific information or instances of inside trading on shares traded by the funds available under US-64, Mr Sinha was non-committal and said “ I am not in position to share any such information at this juncture”.

Reiterating that the government do not interfere in the day-to-day functioning of any state-owned financial institution, the Finance Minister, however, admitted that the Ministry of Finance was “kept in the dark and vital facts were not shared by the UTI with the government”. The Finance Minister said the UTI had been formed under an Act of Parliament and contrary to reports Section 30 and 43 of the Act clearly envisages that Board of Trustees enjoy full autonomy in policy making decisions.