Following is the text of the letter sent by CPI(M) MPs S. Ramachandran Pillai, leader CPI(M) Group Rajya Sabha, Basudev Acharya, Dy. leader CPI(M) group in the Lok Sabha, and Nilotpal Basu, CPI(M) Chief Whip in the Rajya Sabha, to Shri Yashwant Sinha, Minister of Finance, today.
Dear Shri Yashwant Sinhaji,
We are disturbed, if not outraged over the decision of the UTI to declare a moratorium over the sale and purchase of US-64 units for a six-month period. This decision has sent shockwaves throughout the country, particularly among the 20 million investors in the scheme, the overwhelming majority of whom are small investors.
It appears to us that the Government is now trying to create an impression that they have been taken off guard by these decisions of the UTI. The Government has also accepted the resignation of the UTI Chairman. But it is not enough to admit the complete failure of the UTI management as accepted by Shri Subramaniam through his resignation. The compelling need in this hour of crisis is a categorical reassurance from the Government that it will not let the interests and savings of the small investors to be compromised.
It is also disconcerting for us to observe the tone of surprise in your initial response over the developments of the UTI. Tons of material was being published in the media over the manner in which the UTI was making its investment decisions and its constant refusal to submit its self to any kind of regulatory oversight in complete contravention of the JPC (on the Security Scam) recommendation to this effect. Furthermore, when the UTI did finally agree to some kind of compliance with SEBI regulations on a voluntary basis, some of the major schemes including US-64 was kept out of its purview. The Government cannot escape its responsibility for the investment decisions of the UTI in absence of any regulatory oversight. Therefore the Government must order a thorough prove and scrutiny of the investments of the UTI to find out whether they had been intended to secure the best interest of the investors or they were aimed at benefitting a select group of corporates whose scrips they may have been trading. Similarly, there are also disturbing reports about UTI picking up brokers' scrips in Calcutta Stock Exchange when they faced a payment crisis at prices which adversely affect the interest of the investors. This is all the more necessary because UTI is not only a public financial institution but also the largest mutual fund with a huge deployable fund in the capital market. Based on such a scrutiny the Government should immediately come out with a white paper and initiate action to cleanse the market and the UTI so that the present downturn in the market mood can be reversed. It will also not be out of place to mention that the Government owes this to the nation because the policies of the Government have also contributed in a not so insignificant manner to the erosion of the value of the portfolio of the UTI vis-à-vis the share of PSUs.
We, therefore request you to respond urgently and initiate suitable action to reassure the nation and the small investors that no efforts will be spared to safeguard their savings.