Thursday, January 5, 2012

Sebi allows UTI Asset Management to launch new schemes after gap of 5 months.

The Securities and Exchange Board of India (Sebi) has allowed UTI Asset Management, India's fifth-largest mutual fund, to launch new schemes again after a gap of almost five months. The move comes as a relief to UTI, which was barred by the regulator from launching any fresh scheme in August 2011, till it gets a new chief, as the mutual fund was losing out on opportunities to garner money for its short-term debt products in a firm interest rate regime.

Sebi, in a communication to the fund house last week, said it could launch the five-series of fixed-term income schemes and a gold fund for which it had applied to the regulator earlier. But the letter is silent on whether the fund house could apply for new schemes other than the ones approved now.

A top UTI Asset Management official confirmed the development. "In a high interest rate scenario, FMP as a product category has done well and is expected to be an attractive opportunity," said Jaideep Bhattacharya, group president and chief marketing officer of UTI AMC.

UTI Asset Management has been headless for almost a year now since its former CMD UK Sinha moved to Sebi as its chairman. After Sinha moved out, the daily operations of the fund house is being overseen by four officials - Jaideep Bhattacharya; Imtaiyazur Rahman, chief finance officer; Anoop Bhaskar, head-equities and Amandeep Chopra, head of fixed income.
But rules do not permit a mutual fund to launch products without the approval of its chief executive officer. With an impasse over the appointment of a new chief for UTI, the fund house has been losing out to its peers in terms of product launches.

"We had written to Sebi to allow us to launch new schemes as the processes are already in place," said another senior executive of the fund house. The independent directors of the UTI AMC board have already written twice to all the five shareholders, asking them to speed up the appointment process.

"Independent directors have raised concerns on the delay in appointment as they are forced to be involved with the daily operations of the fund house since they don't have the expertise for the same," said a person familiar with the development.

UTI Mutual Fund's five shareholders are SBI, LIC, PNB, Bank of Baroda and T Rowe Price. Late last year, two independent directors, Anita Ramchandran, who was the acting chairperson of UTI AMC, and Prithvi Haldea stepped down from the board citing personal reasons. They are yet to be replaced on the board.

Source: http://economictimes.indiatimes.com/personal-finance/mutual-funds/mf-news/sebi-allows-uti-asset-management-to-launch-new-schemes-after-gap-of-5-months/articleshow/11370658.cms

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