[Commerce Class Notes] on UTI – Unit Trust of India Pdf for Exam

Unit Trust of India (UTI) is a statutory private sector investment body. It was set up on February 1, 1964 as per the Unit Trust of India Act of 1963. The primary objective of setting up this institution was to channel corporate investments through encouraging productive community savings. Therefore, it allows small-time savers to invest in risk-diverse fields. 

People who hold units under this can sell them to UTI at a given rate as well. A very particular reason why this is an attractive investment option is because the investment in UTI has a certain rebate on income tax. Moreover, the income from UTI is also exempted from income tax as per certain conditions. 

Meaning of Unit Trust of India

Unit Trust is an investment plan where the funds are pooled together and then the investment. The fund that has been pooled is later unitized. The investor is known as a unitholder. He or she holds a certain number of units. On the other hand, the second party which is the manager is responsible for the daily running of the trust and for investing the funds. 

The trustee, governed by the Trust Companies act in the year 1967, is the third party. The role of the third party is to monitor the manager’s performance against the trust’s deed. The purpose of the deed is to outline the objectives and the vital information about the trust. Also, the assets of the trust are held in the name of the trustee. Then they are held “in trust” for unitholders.

What are the Objectives of the UTI? 

This body was set up with a number of plans in mind. The most striking one is guaranteeing a safe return of investment in case the investor is in need of funds. It targets middle and low income groups and encourages them to practice productive investment. 

Unit Trust of India (UTI) provides the investor with a safe return of the investment whenever there is a requirement of funds. The Unit Trust of India provides a daily price record and also advertises it in the newspapers. Therefore, two prices are always quoted on a daily basis. The two prices are the purchase price and the sale price of the units. 

This price may fluctuate on a daily basis but the fluctuations are very nominal on a monthly basis. The price usually varies between July and June. In July, the purchase price is the lowest of the various units. The investor who desires to make an investment can purchase his or her units at this time of the year because this will get him the lowest offer price for the units.

The main and the basic objective of the Unit Trust of India are to offer both small as well as large investors. The means of acquiring shares in the properties results from the steady industrial growth of the country.

Therefore, the main objectives of the UTI can be summarized as: 

• Promotion of savings from lower and middle income groups of the country who may not have the means to directly access the stock exchange market.

• Provide to these groups the beneficial results of investment returns and promote industrialisation in all parts of the nation. 

What is the Management Structure of UTI? 

When this body was organized, it began operating with an opening capital of 5 crore rupees. This was contributed by various other institutions such as the Reserve Bank of India (RBI), State Bank of India (SBI), Life Insurance Corporation of India (LIC) and so on. The UTI can borrow from the RBI in case it needs more financial resources, as long as it can repay the amount within a period of 18 months. 

The management of the UTI is overseen by a board of Trustees. This board consists of a chairman and four nominees appointed by the RBI, one by the SBI, one by LIC and two nominees appointed by the constituent institutions.  

The Unit Trust of India Schemes

1. The unit scheme was introduced in 1964.

2. In 1917, the Unit Linked Insurance Plan was introduced.

3. In 1986, the Children Gift Growth Fund Unit Scheme was brought.

4. Rajlakshmi Unit Scheme was introduced in 1992.

5. The Senior Citizens Unit Plan was introduced in 1993, for the senior citizens of our country. 

6. Monthly Income Unit Scheme. 

7. The Master Equity Plan was brought in the year 1995. 

8. The Money Market Mutual Fund Scheme was introduced in 1997. 

9. Unit Trust of India (UTI) Growth Sector Fund was established in 1999. 

10. Growth and Income Unit Schemes. 

The Unit Trust of India Act

The Unit Trust of India act was introduced in the year 1963 to provide for the establishment of a co-operation. It was established with a view to encouraging saving and investment and the participation in the income, profits, and the gains accruing to Co-operation from the holding, management, and disposal of the securities.