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UTI Chairman allays fears of redemption pressure

Our Bureau

CHENNAI, Aug. 20

CONTRARY to apprehensions of large-scale redemptions, there has not been any redemption pressure on the UTI's flagship scheme, the US-64, according to the Unit Trust of India Chairman, Mr M. Damodaran.

Between August 1, when redemptions started, and August 20, the redemptions have been to the extent of only Rs 82 crore, he told a press conference here on Monday.

``We have a number of people who exit this scheme year after year,'' he said and added that this year too it was nothing unusual. The UTI paid out the money from its own sources and did not ``touch a single rupee'' from the credit it had lined up with ba nks.

Declining to reveal how much line of credit it had arranged for with the banks, Mr Damodaran said the money the organisation had tied up with banks was for a worst case scenario.

The problem with the US-64 was that it was perceived to be an assured return scheme backed by the Government even though UTI had never stated so. No one had done anything over 37 years to dispel that perception, he said.

The Chairman said that UTI would announce the US-64's NAV before January 1, 2002. He asserted that the US-64 was rewarding to those who were with the scheme for a long term and not to those who were looking to book profits in the short term.

The UTI was doing some improvements within the US-64 scheme so that its NAV, when disclosed, is healthier than what it would otherwise be, he said.

The problems with the US-64 scheme were purely market-related and the value of the holdings would improve once the market picked up, he said.

To a question, Mr Damodaran said the UTI had taken ``thousands of decisions'' and what was under investigation was only one decision (in an apparent reference to the CBI investigation into the Cyberspace Ltd deal). ``Some of us are pre-judging the guilt of some of the accused,'' he said and added that it was an investment decision. Several other funds had invested in this particular company at rates higher than UTI's.

The UTI had even booked a profit of about Rs 8 crore in selling shares it had acquired in the company. However, what was under investigation was a private placement in the same company at a later date. That had resulted in a loss as the market price had dropped.