The Hindu : Notice to UTI for abolishing children's fund scheme

Online edition of India's National Newspaper
Wednesday, Feb 18, 2004

Other States

Other States - Rajasthan

Notice to UTI for abolishing children's fund scheme

By Our Special Correspondent

JAIPUR, FEB. 17 . The Rajasthan High Court has issued show-cause notices to the Unit Trust of India and the Union Government on the abolition of the Children's Gift Growth Fund Scheme. The court of the Chief Justice, Justice Anil Dev Singh, and Justice Harbans Lal has given three weeks' time to the parties to respond.

The court intervention follows a public interest writ filed by a senior journalist, Milap Chand Dandia, challenging the UTI's unilateral decision to close down the scheme. He, through his advocate, Manish Bhandari, challenged the decision on the ground that there was no provision for either party to withdraw from the deal.

The Children's Gift Growth Fund is a much- touted UTI scheme launched in 1986 offering 13 per cent annual interest to investors. The decision to discontinue the scheme in which lakhs of investors had put in their money was made on December 15, 2003.

The scheme offered an attractive investment opportunity in the name of children from the time of birth to an age of 15 years and maturing either at 18 years or at 21 years. There had been an option to pay either Rs.1,000 annually from the time of the birth of the child to next 15 years or invest Rs.7, 700 in one go and get Rs.1 lakh besides bonus on completion of 21 years of age. The last date for investors to decide on the two options--either to re-invest in a new Government of India bond or to take back the money--was yesterday(February 16).

The alternative investment offer from the UTI however provides for only 6.6 per cent tax free interest.

The petitioner's advocate brought to the notice of the court that the UTI move would lead to serious problems in the lives of investors who were mostly salaried class and those from the middle income group.

The original provision was that only children, in whose name the investment was made, could avail the money. On maturity they would not have been asked to pay the income tax as well. Discontinuing the scheme before maturity, would mean that the amount could not be used by the children as they are not mature, Mr.Bhandari pointed out.

The amount going to the parents of the children would mean that they would be paying income tax on the additional funds, in some cases, even up to 30 per cent.eom

Printer friendly page
Send this article to Friends by E-Mail

Other States

News Update

Stories in this Section

Notice to UTI for abolishing children's fund scheme