Processing .....please wait.. 
The article has been forwarded.... 
UTI 'error' leaves scores of investors fuming
Tuesday, 13 May 2003, 19:30 IST
MUMBAI: The offices of the country's largest mutual fund, Unit Trust of India (UTI), have been besieged with scores of angry investors after a "processing error" resulted in non-payment of dues to them.
Thousands of investors in the controversial Unit Scheme-64 who opted for cash in exchange of their units under a special scheme announced by the Indian government were given tax-free bonds instead of their encashment cheques.
"Due to an error on our part, people who opted to redeem their bonds for cash were issued bonds," a spokesperson of UTI admitted to IANS.
She added that investors could get the bonds discharged against full payment at the nearest branch of UTI.
At the Borivli branch of UTI in suburban Mumbai, there was confusion as angry investors screamed at counter staff.
"They are definitely going bust, that's why they have sent us these bonds instead of cheques," shouted Arvind Jain, a septuagenarian waiting in a slow moving queue.
With little help coming from the handful staff present there, tempers rose in the stuffy office.
It is not clear how many investors have been wrongly issued bonds instead of the cash payment they opted for. According to UTI employees it could run into thousands.
"The bonds and payments are still being dispatched and more complaints may come in during the next few days," said a UTI employee at the Borivli office.
Analysts say years of mismanagement have substantially eroded the values of UTI's portfolios.
At one time US-64 alone managed a portfolio worth more than Rs 300 billion. Its units traded at Rs14.75 a few years ago are worth only Rs5.50 each.
With scores of investors standing to lose their savings, the Indian government stepped in and guaranteed purchases of each unit at Rs 12 as on May this year.
Investors were also given an option to trade their units for a tax-free bond instead of cash. The bonds, guaranteed by the Indian government, give an annual interest of 6.75 per cent. What is more the interest is exempt from income tax and the bonds can be freely traded in the market.
Analysts say the government expects the corporate sector to buy the bonds and avail of the tax benefits thereby lessening the load on the government and the UTI.
However small investors and senior citizens who have little exposure to the stock markets are thronging to redeem their units for cash as they lose confidence in the country's biggest mutual fund.
Source: IANS
Source: IANS