UTI to discuss exit route for US-64 on Monday

By Our Special Correspondent

MUMBAI, JULY 6. The Unit Trust of India (UTI) has deferred its decision for the bail out package for US-64 and decided to meet on Monday to discuss the issue further.

Addressing a press conference here today after the board meeting, Mr. K. G. Vassal, acting Chairman of UTI, said the board would meet again on Monday to consider the alternatives to bail out its premier scheme US-64. He also said the Board of Trustees reviewed the post July 2 developments.

The board reviewed the developments after the announcement of suspension of sale and repurchase price under US-64 for six months. ``In the light of the Government's concern for the small investors, the board advised the management to work out alternative proposals to satisfy the liquidity needs of US-64 investors, especially small investors, who have been long term investors in the scheme,'' said Mr. Vassal. The board also discussed the scheme financials and prevailing market conditions. Mr. Vassal said after the board decide on alternative proposals to save its premier scheme, ``the proposals would be informed to the Government for its approval.'' Although newspersons repeatedly pressed to know the proposals, Mr. Vassal and Mr. B. G. Daga, Executive Director, refused to comment on that.

The total corpus of US-64 dipped to a low of Rs. 12,772 crores at the end of June 30, 2001 from Rs. 15,505 crores in the beginning of the year. Mr. Vassal also said they had already approached banks for funds and UTI arranged a Rs. 1,500 crore line of credit from State Bank of India. However, he refused to give more details of the borrowing plans.

UTI is processing the dividend of 10 per cent for its US-64 as already approved by the board at its July 2 meeting and despatch of dividend warrants will be completed by July 31. While speaking on the occasion, Mr. Daga said persons who had given mandate for reinvestment of their dividend income would be separately advised about the mode of distribution of dividend to them. He said 75 per cent of the unitholders are individuals (by capital worth) and 55 per cent of the unitholders are the investors holding up to 10,000 units.

Meanwhile, SBI has stated that it would provide liquidity against units of US-64. ``Individuals can avail themselves of a loan up to 60 per cent of the face value of the units (Rs. 6 per unit) from the branches of the bank,'' stated a press release issued by SBI. The maximum loan amount could even go up to Rs. 20 lakhs for units in the demat form. Furthermore, the bank has not made the terms of financing more stringent and loans will be given with the same terms and conditions as applicable to financing against shares and debentures.

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