Uti In Talks With Banks For Customised Schemes

The Unit Trust of India is in talks with public sector banks to launch a specialised scheme for banks. This would be the first such tailor-made scheme for investments by banks.

UTI officials said the funds from banks may actually flow in only after March 31, after the present fiscal's balance sheets are tidied up by them. Only after that can the banks pump in funds into UTI.

For UTI, however, the funds allocation by the banks into its schemes will not come too late, since UTI closes its financial year in June.

"We are expecting a rise in funds flows in the period April to June from the banks," the official said.

In the interim, the trust has also discussed the possibility of banks putting in money into its Unit Scheme 1995, which is also designed for institutional investors and high net worth individuals. US-95 currently has a total corpus of about Rs 200 crore.

"We have told the banks that we will float tailor-made schemes for them if they so require. This will be mainly after March," an official explained.

They said if banks were not too keen on investing in US-64, they could easily opt for US-95 which was a similar scheme, but where higher returns could be expected.

Currently, the banks are parking their surplus funds in SLR securities, since increasing lending would mean keeping a watch on the capital adequacy side as well.

Investment by banks directly in the stockmarkets would also mean getting into a similar situation.

Therefore, UTI is waiting for the banks to sort out these issues, get into a clean balance sheet for the next year before deciding on the scheme.

Overall, UTI officials said the redemptions and the inflows were still running neck and neck, with no clear indication about where UTI would end by June.

However, officials said the inflow from banks was expected to add substantially to inflows after March, improving the net inflow situation substantially.

UTI's other major boost is expected to come from the proposed investments from provident funds once the necessary changes are cleared by the union government.

UTI has already taken up the matter of allowing provident funds to invest in UTI's schemes with the government. It is even planning to launch a specialised scheme for pension funds for this purpose.

Owing to the neck and neck inflow-outflow position, the trust is still not an "aggressive seller'' in the secondary market, said sources.

While it continued to sell according to requirements, the trend so far did not require the country's largest mutual fund to press heavy sales.