Uti Panels On Par With Amcs: Sebi

The Securities and Exchange Board of India (Sebi) has said the three asset management committees set up by the Unit Trust of India would have to conform to the same reporting and compliance requirements as is applicable to the asset management companies (AMC) of other mutual funds.

UTI has set up three asset management panels with former State Bank of India chairman P G Kakodkar and Gujarat Ambuja's Narotam Seksaria as members of the panel overseeing the flagship scheme, US-64.

Sebi has also indicated that while the setting up of the AMCs was a good step forward for UTI, it was not the best option, and the regulator would like to move forward on the issue. Sebi has already raised this issue again at the highest levels. The asset management panels would have to conform to Sebi's reporting requirements with only those modifications required owing to the fact that these would be committees and not corporate entities like the other AMCs.

 

This is all the more significant since Sebi has now tightened the screws on the mutual fund industry as a whole, and is seeking strict compliance with the mutual fund regulations.

Sebi executive director Pratip Kar said, The best solution is obviously the repeal of the UTI Act. But that cannot happen overnight. We will therefore have to discuss how to have a more permanent arrangement for UTI.'' Each asset management panel set up by UTI has four members. While Kakodkar and Seksaria figure on the US-64 panel as independent trustees, B G Bhargava of ICICI is the lone outside trustee in the panel on equity schemes.

The income schemes panel has Tarjani Vakil and chartered accountant P R Khanna as outsiders. Kar emphasised that since UTI was a body under the UTI Act, it could not technically be regulated by Sebi. Yet, since it was a mutual fund, it had to be regulated uniformly like other funds. This is an oxymoron which needs a solution. Though UTI has voluntarily been submitting to all the Sebi requirements, such an arrangement cannot be a satisfactory solution since it does not have an appropriate legal footing'', Kar said.

He said UTI had voluntarily been disclosing the NAVs of the schemes, submitting the schemes for Sebi clearance, and had also got itself inspected by Sebi. But Sebi clearly wants legal recognition to the framework now that the asset management panels are in place.

The best solution is the repeal of the UTI Act. But that cannot happen overnight. We will have to discuss how to have a more permanent arrangement

Pratip Kar Executive director, Sebi