From Rajlakshmi to Kanya Suraksha: UTI learns its lessons
October 14, 2009
UTI Mutual Funds today marked the 'successful' completion of one year of the launch of its girl child scheme named Mukhya Mantri Kanya Suraksha Yojana. To many investors of Rajlakshmi, the fact that an offshoot of Unit Trust of India has dared to launch another scheme for the girl child would itself be a matter of great agitation. But there is a difference. This scheme for the girl child has been launched with the Bihar government chipping in with the initial investment. And unlike the Rajlakshmi scheme, which was launched in 1992 and discontinued in 2000, the returns are not an unrealistic 16% and more.
Under the Mukhya Mantri Kanya Suraksha Yojana, the Government of Bihar contributes Rs2,000 for every girl child falling below the poverty line born on or after November 22, 2007. The benefits of the scheme are limited to two girls per family falling below the poverty line. The amount of Rs2,000 is invested by the Women Development Corporation, Patna, Bihar, on behalf the Government of Bihar in UTI-Children's Career Balanced Plan-Growth Option. On completion of 18 years the amount equal to the maturity value will be paid to the girl child. Mukhya Mantri Kanya Suraksha Yojana was launched by Government of Bihar, a year back, under its various activities for the welfare of the girl child.
U K Sinha, Chairman and Managing Director, UTI Asset Management Company said, "Within a year the scheme has become the largest scheme of its kind in the country."
In contrast, under the Rajlakshmi scheme, a minimum of Rs1,500 was to be deposited in the name of the girl child and the proceeds would be paid to the child on completion of 16-20 years of age. However, it was abruptly discontinued after the debacle of 2000, when UTI itself had to be bailed out with a huge infusion of tax-payer funds and investors had to be satisfied with a redemption amount.
The investment monolith of the 1980s and 1990s was then split into UTIMF and Special Undertaking -Unit Trust of India.
The Rajlakshmi scheme too, had received a very good response from the investors initially. UTI's website then mentioned that the Rajlakshmi scheme, launched in 1992, offered an implicit return of 16.16% to 16.75% based on estimated returns available from capital market instruments then. What it probably means is that its expert fund managers made all the wrong assumptions in 1992 when they believed that high interest rates and a buoyant capital market would last forever.
UTI also had to face legal cases filed by investors after the discontinuation of the scheme. However, UTI was cleared of all the 50 odd legal cases in 2002. UTI had around 12.5 lakh investors for that particular scheme