Abstract

Unit Scheme 64 (US-64), was the first scheme in the country to channel public savings into non-deposit instruments like equity and corporate debt. An open ended, non-assured income scheme, it was structured as a balanced fund. Considered an essential investment by most middle-class Indians, it had as many as 20 million investors at its peak. In the 1970s and 1980s, a combination of favourable circumstances allowed UTI (Unit Trust of India) to flourish, and enabled it to pay high dividends to its unit holders. But in the late 1990s, UTI went from crisis to crisis. In 1998, the reserves of US-64 turned negative. But the fund became healthy within a year thanks to the surge in equity markets. UTI's wrong investment decision, coupled with its efforts to prop up the markets to please the finance ministry led to a second crisis in 2002. The government repealed the UTI Act in October 2002 and launched a new scheme, Unit Scheme-2002. The case discusses the rise and fall of US-64 and the government's abortive attempts to restore the fund's past glory.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

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Keywords

US-64, Unit Scheme 64, Unit Trust of India, UTI, Net asset value, NAV, Special sales price, SSP, Foreign Exchange Regulation Act, FERA, Deepak Parekh Committee, UTI Mutual Fund, Equity funds, Unit Scheme - 2002, Non performing assets, NPA