Calcutta, June 8: Unit Trust of India’s (UTI) largesse — particularly with its flagship scheme US-64 — knows no bounds. It has paid dividends out of its reserves and offered the highest paying fixed-income security to close the scheme without triggering an exodus.

However, its generosity did not end there. The redemption of US-64, both in cash and bonds, has gone haywire due to a snag in the software provided by Tata Consultancy Services and this could result in an inadvertent enrichment of its unit-holders by hundreds of crores.

UTI had decided that it would pay a redemption price of Rs 12 per unit for holdings up to 5,000 units and Rs 10 per unit for holding in excess of that amount. But the Trust appears to be redeeming — both in cash and in bonds — many more units than 5,000 at Rs 12 apiece. The Trust issued bonds worth Rs 8,000 crore and handed cash to the tune of Rs 2,000 crore to 25 lakh investors.

Consider the following example. Pyare Lall (name changed) of Salt Lake, Calcutta had bought a little over 25,000 units in several installments.

In accordance with UTI’s redemption scheme, he should have received Rs 12 each for 5,000 units, and Rs 10 for the balance, but he was paid Rs 12 for over 16,000 units.

Why did this happen? The redemption scheme requires UTI to consolidate Pyare Lall’s total holding of over 25,000 units, which were bought at different times in different denominations. To do this, UTI used a software that considered the name of the first-holder and the address.

The software was supposed to issue a unique client ID to each investor. However, since the consolidation of the holding went haywire, a large number of investors were issued more client IDs than one. In Pyare Lall’s case, no less than four client IDs were generated.

The software determined that Pyare Lall was four different individuals though he had the same name, and lived in the same house. In some of the units, Pyare Lall’s name was spelt as ‘Pyare Lal’ and in certain others, his address read Flat No. 8 instead of Flat 8. Separate client IDs were issued to Pyare Lall, Pyare Lal, and the Pyare Lall(s) living in Flat 8 and Flat No. 8.

“We used the software provided by TCS. It compared the name and the address of investors to generate client IDs. I think it’s impossible for any software to treat Flat 8 and Flat No. 8 as same (or for that matter Pyare Lall and Pyare Lal). We have ensured that (Pyare Lall’s) holdings were not consolidated with his namesake,” a UTI spokesperson said.

Software professionals say it should not have been difficult to avoid the gaffe had the programmers been aware of the possibility. “The software should have been able to generate alerts, when such minor differences occurred,” they said.

It is impossible to establish UTI’s loss from the software snafu, but it could be hundreds of crores. The UTI spokesperson said no further attempt would be made to consolidate the holdings and reclaim the excess amount paid, either in cash or in bonds.