Uti Plans Relaunch Of Children'S Fund

The Unit Trust of India is planning to re-launch its popular Children's Growth Fund.

The scheme, it may be recalled, was temporarily discontinued towards the last quarter of 1997 as the financial institution felt it would not be able to sustain an assured income scheme of such long maturity.

The scheme, when it was discontinued, was offering investors an assured 14 per cent return per annum for twenty years, if the scheme was taken up for a new-born child.

With popular demand for the scheme on the rise, the Unit Trust of India is looking at various options before re-introducing the scheme, according to sources.

 

This primarily means a downward revision in interest rates offered under the scheme.

While remaining tight-lipped about the possible rate the UTI will offer for the scheme when it is re-launched the 12-13 per cent per annum rates offered on the Monthly Income Plans could be the benchmark rates, sources said.

The Children's Gift Growth Fund itself started out with an interest rate of some 12.5 per cent but kept getting higher until it reached 14 per cent, at which point the scheme was discontinued - i.e., no fresh investments were accepted. Launched in 1986, the scheme has a huge corpus of some Rs 4000 crore, and has been a big success in the

long-term schemes launched by the Unit Trust of India.

Although it will be viable to keep the scheme going if the investment will be redeemed after ten years, assured returns for two decades in the current circumstances is a little dicey, UTI officials explained, while talking to Business Standard.

Essentially, the scheme allows for investment made in a child's name to be redeemed on maturity age of the child -- 18 years for girls and 21 for boys. The rate of return varies between 12.5 per cent and 14 per cent per annum depending on the time of entry into the scheme.

S K Basu, executive director, department of funds management, UTI, who was here to formally launch UTI's bond fund, said UTI's bond fund has minimum target corpus of Rs 200 crore. "It will run parallel to the various monthly income plans of UTI and will not be positioned as a replacement," he said while addressing newspersons here today.