Unit Trust of India's (UTI) move to delist its open-ended schemes could help it realise its target of Rs 150 bn in terms of higher inflows. This was reported by a leading financial daily.

UTI, with assets in excess of Rs 630 bn as on 30th September 1999, is India's largest mutual fund (MF). It accounts for 73% of India's MF segment.

UTI has already applied to the Securities & Exchange Board of India (SEBI) for permission to delist the shares.

UTI's move to delist its schemes has a lot to do with its ambitious target of cornering Rs 150 bn in fresh mobilisation. The target would have been more ambitious had UTI continued to list its schemes on the bourses. This is despite the fact that UTI has taken several steps to facilitate higher inflows like a common application form and lateral shift between schemes at net asset value (NAV) related prices.

UTI has an extensive network of 53 branches and franchise centres and more than 300 representatives across the country. So investors can in any case purchase these schemes at NAV-related prices. Therefore, delisting the schemes is an obvious conclusion.

Some investors exploit the differences in the prices at the stock exchanges and the repurchase price at UTI. The arbitrage opportunity is the reason why some of UTI's schemes - Mastershare and Mastergrowth record trading volumes of around 85,000 units and 35,000 units respectively on the exchanges.

A senior UTI official remarked that till such a time that its units remain listed, investors will be deprived of realising the true worth of their investments.

UTI also plans to convert all its remaining close-ended schemes into open-ended ones once they come up for redemption.

If UTI's move to delist its open-ended schemes proves successful, other MFs will also follow suit. However, necessary go-ahead from SEBI will be needed.

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