UTI Mutual Fund to allow redemptions

Unit Trust of India, the country's largest mutual fund group, said today that it would partly lift the freeze on the sale and purchase of units of its flagship fund, US-64, on Aug. 1, permitting almost half of the plan's investors an exit.

The state-run fund said in a statement, after a board meeting here, that it would buy back as much as 3,000 units per holder from that date, paying a face value of 10 rupees (21 cents) a unit. That is about a 30 percent discount to the May repurchase price of 14.25 rupees, after adjusting for dividends.
The one-time buyback period runs until the end of this year, said B. G. Daga, executive director at Unit Trust. The statement also said Unit Trust would sell and buy back US-64 units at their net asset value on Jan. 1, 2002. No US-64 units will be sold by by Unit Trust before that date.

Unit Trust froze redemptions on its 37-year-old plan, which a 1999 household survey ranked as the safest investment after gold and bank deposits, to stem the exodus and because of a mismatch in the price of its units, which it sets monthly, and the market value of the fund.

Earlier today, India named M. Damodaran, a former finance ministry official and currently officer on special duty with the Reserve Bank of India, chairman of Unit Trust for a year.

''I am happy with the proposal,'' said R. H. Patil, a member of the panel and the former chief of the country's National Stock Exchange, its largest by volume.