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Ex-finance secretary draws flak over handling of US-64

The Joint Parliamentary Committee on stock market crash has charged former finance secretary Ajit Kumar with being "casual" in tackling a crisis that led to the freeze of Unit Trust of India's popular US-64 scheme for six months in July last year.

The then finance secretary Ajit Kumar "considered the problem in a routine and casual manner which is not expected from an officer of his rank," the committee probing the stock scam said in a two-volume draft report.

The report said though Ajit Kumar had received a letter from the then UTI chairman P S Subramanyam at his residence on Friday, June 30, 2001, yet no action was taken by the secretary to immediately discuss the matter with the then Finance Minister Yashwant Sinha or find solution to the serious problem.

In that letter, Subramanyam had clearly stated that the UTI board would meet on July 2 and they were considering two options either to freeze US-64 redemption or to convert US-64 to "NAV basis."

"Quite obviously, this was a very important piece of news and the finance secretary should have reacted immediately," the report said adding, "Ajit Kumar's action should have commenced immediately after discussion on this subject with the joint secretary (capital markets) on June 29, 2001."

Kumar could have tried to evolve methods to avoid redemption crisis and also discussed the matter with the finance minister immediately, the report said adding the secretary mentioned this fact to Sinha on July 2, only after the weekend was over.

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