BoI, UTI Mutual Fund to offer micro-pension to self-help groups

03 August 2006

Mumbai: Bank of India (BoI) has entered into a strategic tie-up with the UTI Mutual Fund (UTI MF) for providing members of self help groups (SHGs) an investment opportunity through a micro-pension initiative under the UTI-Retirement Benefit Pension Fund.

The initiative aims to provide much needed social security cover for the low income group during their old age. Under the initiative members of SHGs maintaining accounts with the bank will contribute a minimum amount of Rs100 every month towards UTI-Retirement Benefit Pension Fund up to the age of 55 years. This would enable them to receive pension in the form of periodical income/cashflow after they reach the age of 58 years.

"Bank of India is very much alive to it's corporate social responsibility and while pursuing profits, it is equally focusing on effective financial inclusion of masses - particularly of the poorest strata of the society in the banking & financial system of the country," said M Balachandran, chairman and managing director, BoI.

"This micro pension initiative in alliance with UTI Mutual Fund - a pioneer in this sector, aims to provide an old age social security cover - a periodical stream of income generated out of small savings invested by creating group saving synergies and by bringing in best benefits of investments in capital markets by bringing in expertise of seasoned fund managers of UTI MF. Bank of India will distribute this product to low income groups through SHGs."

BoI has over 49,000 SHGs consisting of more than 4lakh members as it's customers of which over 36,000 SHGs are women beneficiaries. The Bank has a large concentration of SHGs in Tamil Nadu, Andhra Pradesh, Maharashtra, Madhya Pradesh, and Uttar Pradesh.

According to U K Sinha, Chairman and Managing Director, UTI AMC, "the Micro-Pension initiative will help inculcating the habit of regular savings among low income groups, which will help them in planning
for their future and will also enable them to share the benefits of growth of the Indian economy."

The UTI-Retirement Benefit Pension Fund is an open-end tax saving-cum-pension fund. The scheme has been notified by the Central Government as a Pension Fundeligible under sub-section (2), clause (xiv) of section 80C of Income- tax Act, 1961 for assessment year 2006-07 and subsequent assessment years.