Unit Trust of India (UTI) with all details

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The Unit Trust of India (UTI) was established in February 1964 under the Unit Trust of India Act, 1963. It was established as a statutory public sector investment institution. In July 1964, UTI began its functioning. It allows small investors to diversify their risk by investing in a variety of areas. Headquarter is located in Mumbai, Maharashtra, India.

If required, unitholders may sell their units to UTI at the prices set by UTI. One of the benefits of investing in UTI is that it provides an income tax refund and the income generated by the UTI is tax-free which is subject to certain limitations.

UTI: Organisation and Management

UTI commenced its operations with an initial capital of ₹5 crores as a contribution from the RBI, LIC, SBI, its subsidiaries, and scheduled banks and financial institutions. The initial capital of Rs. 5 crores was split into 1,000 certificates of ₹ 50,000. The UTI may borrow money from the Reserve Bank of India to augment its financial capital, with the money being repayable either on-demand or within 18 months of notification issued.

UTI is governed by a Board of Trustees that includes a chairman and four members appointed by the Reserve Bank of India, one member appointed by the Life Insurance Corporation of India, one member appointed by the State Bank of India, and two members elected by the contributing institutions.

UTI: Objectives

The two primary objectives of UTI are:

  • To motivate and accumulate the savings of low- and middle-income groups
  • To allow people to share in the country’s industrial development’s benefits and prosperity

The Unit Trust of India ensures that the investor receives a secure return on their investment whenever they need it. UTI publishes a regular price record that is advertised in newspapers.

Two prices are quoted regularly: the purchase price and the sale price of the units. This price may have a slight variation on a regular basis, but monthly fluctuations are rare.

The cost varies depending on whether it is July or June. In July, the various units’ purchase prices are at their lowest. A customer who wants to make a purchase can do so at this time of year and get the best deal on the units.

The UTI’s main goal is to provide small and large investors with the opportunity to purchase shares in properties resulting from the country’s steady industrial development.

History of UTI

The Unit Trust of India, which primarily deals with mutual fund schemes is known throughout India as UTI Mutual Fund. UTI Asset Management Company Private Limited established on January 14, 2003 is in charge of it.

The UTI Trustee Company Private Limited founded UTI Asset Management Company Private Limited. It was established to deal with the various schemes formed by UTI Mutual Fund as well as the schemes that are transferred by UTI Mutual Fund.

The UTI Mutual Fund has gained notoriety for creating a series of schemes that are suitable for all classes of Indian people. The Unit Trust of India has 70 UTI Financial Centers and UTI International offices in Dubai, London, and Bahrain, as well as other service centres around the world. 

UTI Mutual Fund is backed by the Bank of Baroda, Punjab National Bank, and Life Insurance Corporation of India. The creation of the Unit Trust of India signaled the beginning of India’s mutual fund scheme. UTI Mutual Fund launched a flagship scheme, US-64, in 1964, which became the standard term for mutual fund services.

In 2001, the Unit Trust of India was on the verge of collapsing, but the Indian government intervened and restructured the mutual fund system. On the other hand, UTI Mutual Fund redeemed its tempo by competent management and subsequently achieved a booming market. According to 2006 estimates, UTI Mutual Fund is India’s largest mutual fund service provider, with about 35,028 crore INR assets. UTI Mutual Fund and a nominal project of Unit Trust of India were initially separated in 2003 into two broad divisions. However, SEBI Regulations later took over UTI Mutual Fund, while the other division was kept under direct government control.

 At present, Unit Trust of India is governed by Mr. U.K. Sinha who is also the chairman and managing director of the company.

Functions of UTI

  • Accepting discounts, buying or selling bills of exchange, promissory notes, bills of lading, warehouse receipts, and other records of title to goods
  • To lend money and advance payments
  • Merchant banking and investment advisory services will be provided
  • To operate leasing and hire purchase business
  • Extend portfolio management services to people who don’t live in India
  • To purchase, sell, or deal in foreign exchange
  • In collaboration with or as an agent for GIC, develop a unit scheme or insurance plan
  • To put money into any protection issued by the government, the RBI, or a foreign bank

The UTI can sell and buy its own units, as well as invest in, acquire, retain, and sell securities. The UTI has released units with a face value of Rs. 10 each. These units were initially sold at face value, with prices set by the UTI on a regular basis. Units are available in groups of ten or multiples of ten.

List of familiar schemes of UTI

  • Unit scheme—1964
  • Unit Linked Insurance Plan—1971
  • Children Gift Growth Fund Unit Scheme—1986
  • Rajyalakhmi Unit Scheme—1992
  • Senior Citizen’s Unit Plan—1993
  • Monthly Income Unit Scheme
  • Master Equity Plan—1995
  • Money Market Mutual Fund—1997
  • UTI Growth Sector Fund—1999
  • Growth and Income Unit Schemes

Advantages

  • The investment is safe, and the risk is distributed through a diverse set of securities
  • Unitholders will receive a consistent and high level of profits, as 90% of the company’s earnings will be distributed
  • Individuals who earn dividends of up to Rs. 1,000 are exempt from paying income tax
  • Since the units can be sold back to the trust at any time at rates set by the trust, the investment has a high level of liquidity

Best UTI Mutual Fund Schemes as per 2021

Fund Name3-year Returns(%)5-year Returns(%)
UTI Liquid Cash Fund6.15%6.53%
UTI Nifty Index Fund5.64%8.89%
UTI Equity Fund7.52%9.24%
UTI Mastershare Fund4.05%6.80%
UTI Hybrid Equity Fund0.88%3.88%

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