Restructuring UTI: the missing dimension

Abstract

According to press reports, the Unit Trust Of India( UTI), is to be restructured and split into two organisations. The restructuring has been considered necessary for achieving a Mevel playing field' in the mutual fund industry. There also has been a persistent demand to subject UTI to regulation and inspection by the now empowered Securities and Exchange Board of India (SEBI). The Government, reportedly, is of the opinion that, if the emerging mutual fund industry is to be meaningfully regulated, then UTI, also, will have to be subjected to SEBI regulation. The need to subject UTI to regulation by SEBI is indisputable. However, the rationale for splitting UTI is unfathomable. It is irreconcilable with our current efforts to adopt a more market oriented economic regime. Fundamentally, in the new economic framework, the belief is that the attainment of a level playing field is achieved better by market forces than by legislative intervention. The proposea step, thus, runs counter to the efforts to create a more market oriented economic environment.