Money Matters

Mumbai, June 1: Over 60 per cent of investor money in US-64 — the hugely popular mutual fund of UTI that went bust more than six years ago — are lying unclaimed at the time of the May 31-deadline for redemption.

The unclaimed sum stands at Rs 4,500 crore and is in the form of bonds; the number of investors who are yet to redeem the bonds is about six lakh, while another seven lakh have done so. The total value of the bonds is Rs 7,300 crore.

After the net asset value of the US-64 plunged drastically in January 2002, the government created the Special Undertaking of UTI to take over the assets of US-64 in May 2003.

In June 2003, the US-64 investors were given the option of cashing out immediately or convert their holdings into five-year, 6.75 per cent tax-free bonds that had to be redeemed by May 31, 2008.

On redemption, they had the option of converting their dues into units of UTI Mutual Fund. In 2003, UTI was split into the special undertaking and UTI Mutual Fund, which manages net asset value-based funds.

Officials at UTI Mutual Fund told The Telegraph that the government, along with the special undertaking, would decide on what to do with the unclaimed money within a fortnight.

“We have set up a team of additional 150 employees across all our branches to trace the investors in US-64. Three rounds of letters have been sent out to the investors who have not yet claimed their money,” Jaideep Bhattacharya, chief marketing officer, UTI Mutual Fund, told The Telegraph.

He said more than one lakh US-64 investors with bonds worth about Rs 2,100 crore had opted to convert their bonds into units of UTI Mutual schemes. “They preferred to inject some more money over and above the converted amount, while migrating into the schemes.”

The open-ended UTI Infrastructure Fund, which is one of the top performers in the industry, attracted about 70 per cent of the amount that were converted into various schemes by the holders of US-64 bonds. According to Value Research Online, a company that tracks the mutual fund industry, the infrastructure fund had returns of about 38.43 per cent on a three-year basis.

A handful of US-64 investors, especially in the senior age bracket, converted their bonds into debt schemes under three-month, six-month, one-year and two-year fixed maturity plans.

US-64 investors, with less than 200 bonds, need not apply for redemption separately at any UTI branch.

According to Bhattacharya, “There are about six lakh US-64 investors who hold less than 200 bonds. These unit holders account for a total amount of about Rs 700 crore in the scheme. The money will be credited directly to them.”