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Media Pulse

UTI ditches investors, while SBI flourishes

Strange are the ways of the Indian economy. While there is general talk of recession, with industrial slowdown worrying the market analysts, there comes the cheerful news from the State Bank of India that its profits have gone up by over 51 per cent. The largest public sector bank has also declared a dividend of 60 per cent. On the other hand, one of the largest investor-based mutual funds, the Unit Trust of India let down millions of people. For the first time since its inception, the Unit Trust of India decided to skip the dividend on its flagship scheme US-64 for the year ending June 30, 2002.

The flagship scheme is a Net Asset Value (NAV) based scheme and there was no sanctity attached to announcing any dividend. Whenever the performance of the scheme improves, the Board can review the decision and decide about paying the dividend, UTI chairman, M. Damodaran stated. Last year (2000-01), despite the financial crisis which gripped the flagship scheme, the Board had announced a 10 per cent dividend.

In a statement, UTI said that in arriving at the decision, the Board noted that this would increase the gap between the NAV and the repurchase price determined as a part of the special relief package for US-64. On meeting the shortfall on its two schemes—Monthly Income Plan 1997 (II) and Special Institutional Investors Scheme—Damodaran said UTI would use a credit line of Rs. 1,000 crore from the State Bank of India on the back of a guarantee given by the Union Government.

The State Bank of India, meanwhile, reported a spurt in net profit at Rs. 2,431.62 crore for the financial year 2001-02 as compared to Rs. 1,604.25 crore in the previous year. The bank also provided a whopping Rs. 2,153.10 crore towards NPAs. The board recommended an increased dividend of 60 per cent against 50 per cent to the shareholders following the increase in net profit, SBI Chairman, Janaki Ballabh announced.