State the functions of Unit Trust of India?
The investment trusts are called Unit Trusts. In India country, Unit Trust of India (UTI) is said to be the largest organization of this type. It was set up under Unit Trust Act of 1962 and in 1964, it started operating. Reserve Bank of India subscribed its initial capital with LIC, State Bank of India and other financial institutions.
Functions of Unit Trust of India (UTI)
UTI prefers to invest its funds in shares and debentures of various companies. Management, in trust holds the shares and debentures. Public are offered units’ by the management, based on value of the securities. Individuals at any time can buy and sell units. On the shares and debentures that management holds, it gets interest and dividend. The income in the form of interest and dividend is distributed among unit holders in proportion to the value of their holdings.
UTI provides assurance to the small savers that their savings will be invested in profitable companies, if they buy units. They prefer to buy units because UTI provides them a reasonable return in the form of dividend on value of units. UTI’s invest-able funds are available to industrial enterprises. Investment trusts or UTI proves to be very beneficial to the companies because companies are provided with long term finance with the help of UTI.