The argument that US-64 and other schemes were floated before the regulatory authority, Sebi, came into picture does not hold water as in the past many institutions came under regulatory supervision which were formed later, he said. Citing an example, the panel member said that the housing finance firm HDFC was instituted at least 14 years before National Housing Bank (NHB) was formed. ``However, HDFC is now governed by NHB regulations and UTI should follow the same principle,'' he said.

The committee is expected to give its final report by the first week of next month. Though all the new schemes of the UTI are presently vetted by the Sebi, theTrust's largest scheme, US-64 with a corpus of over Rs 20,000 crore was not screened by the regulatory body. In 1996, Sebi had warned the Union government that the UTI was dipping into its reserves to pay dividend to its unit-holders.

The panel members were of the view that the UTI Act should be suitably amended to let the Sebi regulate the Trust so that the small unit-holders should repose faith on country's largest mutual fund. The committee was instituted by the UTI after the mutual fund declared that it has suffered a notional loss of over Rs 3,000 crore due to sagging stock markets soon after the nuclear tests. Despite the Trust is not declaring its NAV, analysts say that the NAV of US-64 is in the Rs 10-11 bracket which is far below its sell and repurchase price of around Rs 14.50.

Panel members are of the view that the vexed issue of whether UTI should declare the NAV of US-64 should be left with the SEBI.