Date:17/02/2005 URL: http://www.thehindubusinessline.com/2005/02/17/stories/2005021702101300.htm

Back `Govt did not gain from UTI bailout'

Our Bureau

New Delhi , Feb. 16

THE Government said on Wednesday that it had not gained financially in the UTI bailout package at the cost of investors.

Responding to reports in a section of the media, the Finance Ministry said that the news item gives a misleading impression that the Government had made a gain of Rs 6,000 crore in the SUS-99 and the US-64 scheme, while investors had suffered.

An official release said that the Government had provided support of Rs 12,771 crore for US-64 and assured return schemes (ARSs) by way of cash and issuance of Government of India bonds. Against this, the enhancement in the SUS-99 portfolio was only about Rs 2,900 crore. "As such, it is incorrect to draw a conclusion that Government has gained financially in the UTI bailout package," the release said.

In addition to the cash and bonds issued by the Government of India, it has also guaranteed the bonds issued by SUUTI worth Rs 8,470 crore for US-64 investors and for Rs 6,159 crore for ARSs.

The release said that the NAV of US-64 as on May 31, 2003, was Rs 6.50, but the small investors (owning up to 5,000 units) were paid at the rate of Rs 12 per unit. The investor was also given the option of a tax-free bond carrying a coupon rate higher than the prevailing market rate. The UTI bailout even today has cost the Government over Rs 6,000 crore, the release added.