Uti Paves Way For Rs 20 Cr Arf

The board of Unit Trust of India (UTI) has approved a proposal to set up an internal asset reconstruction fund (ARF) with an initial funding of Rs 20 crore to purchase non-performing assets of some of the open ended schemes. This will help these schemes in improving their net asset values, a UTI press release said today.

UTI is seeking the Securities and Exchange Board of India (Sebi) approval in this regard and the management of ARF will be vested with a designated fund manager. ARF is intended to be an interim measure till the Asset Reconstruction Company is set up in due course, the release stated. The initial corpus of Rs 20 crore is being transferred from the Development Reserve Fund (DRF) to buy out NPAs, the release said.

 

ARF is in the form of an internal fund, and not a company. This fund is expected to buy out NPAs from four open-ended schemes to begin with, at a written-down value, sources said. UTI has set up a special team comprising people from accounting, legal and fund management areas to solely work for the ARF.

While ARF will concentrate solely on recoveries after picking up NPAs, the schemes from which NPAs will be taken get the benefit of totally clean balance sheets without any NPAs.

The recoveries, as and when they happen, would also go to the schemes. The total value of UTI