Mumbai, Dec. 23: A three-member sub-committee at Unit Trust of India (UTI) will review the JPC report that bared murky deals and suggest ways to avert the kind of crisis that brought the institution down on its knees.
The committee comprising UTI board members — M. R. Mayya, S. H. Bhojani and P. N. Shah — will submit its proposals in a month. The decision came at the end of today’s board meeting, the first after the JPC report on the stock scam of 2001 was released last week. The meeting approved the restructuring of Mastershares, a close-ended fund that will now turn open ended.
The panel will advise the board on legal ramifications of the report and recommend steps to be taken by the mutual fund major to stave off a similar predicament.
The Joint Parliamentary Committee report has pointed out several flaws in the way Unit Trust went ahead with investment decisions under the chairmanship of P. S. Subramanyam — who lost his job after US-64, the Trust’s flagship scheme, wobbled.
The JPC report had to dig deep to find out shortcomings in systems followed by the Trust in its investment decisions and dealing-room procedures. The panel had said much of the problems arose because too much power was concentrated in the hands of the UTI chairman. The role of trustees —silence or reluctance to block dubious deals — was also questioned.
Sources say the present UTI management has already addressed some problems thrown up by the report, including streamlining investment procedures and giving fund managers more powers. Even so, the board felt it would be prudent to take a look into the JPC report threadbare for lessons.