One year after the Unit Trust of India shocked investors by freezing the sale and repurchase of its flagship Unit Scheme-64, the tragic tales from investors who have lost money continue to pour in.
Investors are flummoxed that an investment behemoth which was considered safer than a nationalised bank had simply collapsed and leave alone the returns, much of their principal too has gone.
Those who invested in the Monthly Income Plans (MIPs) are amazed that the fine print on each annual scheme was different - while some promised assured returns, others didn't and the chances of recovering their money, invested on the basis of blind faith are entirely dependent on their own good fortune.
If they were lucky enough to have invested in the right schemes, the government would bail them out. Had they taken UTI's safety record and returns for granted and overlooked the all important "assured" return clause, they would be out in the cold.
UTI's losers are a variety of trusts, charities, educational institutions and non-governmental organisations whose activities have been badly hit by the loss in dividend and principal.
Many continue to write to UTI Chairman M Damodaran seeking his advice on what they should do. Some hope that he would sympathise with their dilemma and compensate them as a special case because their funds are meant for community development.
They fail to realise that the UTI chairman is equally helpless and there is little he can do to help anyone out on a discretionary basis.
In fact, everywhere he goes - whether it is his doctor, his dentist or the neighbourhood grocer - everybody had invested in UTI and has lost some money or dividend. And everybody has a tale of woe.
The most tragic are the pensioners who had looked upon their UTI investment as their only retirement benefit, says Mr Damodaran. "I can't even bear to look into their eyes." Ironically, it is the man who is fire-fighting on behalf of investors who also has the dirty job of facing the flak and the accusations. As for former chairman P Subramanyam, the person who has been accused of recklessly speculating with their savings - he is busy trying to prove his innocence.
One year later, there is no action against Subramanyam, save the single case pertaining to a Rs 24 crore (Rs 240 million) investment in Cyberspace Infosys, which has also made no progress after the initial hype over the arrests.
The highly resourceful Joint Parliamentary Committee, doesn't seem to have figured out what any ordinary investor knows; which is that unless it asks the right questions it cannot get the correct answers.
The JPC's draft report, which is now disowned by the committee, had pinned the blame on the finance secretary.
But as Group Captain S R Purandare from Pune says: "The real culprit in this biggest scam of our times is not the secretary who was casual about briefing his minister about the UTI disaster; in fact, the minister was well aware of it, indeed he was responsible for it. The roles played by the then finance minister and the Prime Minister's Office need close investigation by the Central Bureau of Investigation and the Central Vigilance Commission. The scam is one single reason for which the government should have resigned if they had any morals."
Morals and scruples are not something one associates with our politicians, but as Gp Capt Purandare says, the government should at least make an all out effort to put the organisation back on its feet, to punish the guilty and to try and repay investors.
Instead, key decisions such as the need to repeal the UTI Act, to put in place a new set of sponsors and to find ways to salvage and strengthen the organisation have remained on the back burner.
The government continues to quibble about its responsibility towards the returns assured by UTI. On the contrary, it is guilty of planting patently false reports in various newspapers indicating that it may actually avoid a full bailout of UTI (that could run to over Rs 10,000 crore or Rs 100 billion), and that it would arm-twist financial institutions and insurance companies to step in as sponsors and accept the liability.
That is clearly untenable. But unless the government stops shirking its responsibility and continues to extend funds to UTI in driblets, it is killing any chances that the trust has of survival and recovery.
Only when the government quantifies and acknowledges its liability towards US-64 and the other schemes, that the organisation can stop from bleeding and will minimize the financial burden on the exchequer.
So far, the uncertainty and delays in clearing new schemes or handing over the bailout sums have already caused immense damage. UTI remains a continuous seller in a weak market with little option but to flog its blue chip stocks.
Consequently, it has sold large chunks of shares in eight of its top ten holdings over the last year. Although the US-64 scheme has reduced its negative reserves by Rs 490 crore (Rs 9.40 billion), the redemptions continue and its corpus has dropped 23 per cent to Rs 12,662 crore (Rs 126.62 billion) as against Rs 16,432 crore (Rs 164.32 billion) in June last year.
While the government has committed a Rs 1,000 crore (Rs 10 billion) assistance towards meeting redemption pressure on account of the US-64 scheme during the current financial year, in addition to the Rs 300 crore (Rs 3 billion) paid out last year, the government's own liability towards unit-holders is large.
On May 31, 2003 it may end up forking out over Rs 5,000 crore (Rs 50 billion). Further, its contingent liability towards shortfall in its assured returns schemes added up to Rs 8,189 crore (Rs 81.89 billion) as of January 31, 2002.
Where the returns are assured, the government will have little option but to dip into taxpayers' money to pay investors. Although this is patently unfair to the average taxpayer who is not a unit-holder, there seems little option.
What the government needs to do is to acknowledge its responsibility, instead of pretending that it can dump the burden on some designated "sponsor" institutions with deep pockets.
It is only when the government acknowledges its responsibility that it can announce a gameplan to ensure UTI's survival, staunch its continuous selling and the bearish effect it has on the entire capital market, and work towards improving returns on its existing schemes.