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Deepak Parekh panel on US-64 to submit report in Jan 1999

The high-powered committee headed by the Infrastructure Development Finance Corporation chairman Deepak Parekh, which was set-up by the ministry of finance to suggest restructuring the troubled Unit Scheme 64 of the Unit Trust of India, would be able to submit its recommendations in January 1999.

Parekh had a two-hour meeting with UTI chairman P S Subramanyam on Tuesday evening in Bombay. He said that the committee would require at least another two weeks to finalise its recommendations that would pave the way to turnaround the US-64 scheme.

The US-64 scheme, which has a corpus of Rs 220 billion, had shown a negative balance in reserves to the tune of Rs 10.98 billion in September. This was due to a sharp slide in the scheme's equity investments as a result of the nuclear tests by India in May and economic sanctions that followed it.

Despite showing a negative balance even during June 1998, the UTI top brass had recommended the assured 20 per cent dividend to unit-holders. After the scheme's under-performance became public, UTI had faced redemption pressure for a while, but simmered on assurances by Finance Minister Yashwant Sinha that the government would not allow the UTI and the US-64 in particular to go bust.

Doubts have since been expressed on the UTI's ability to maintain the same rate of dividend in June 1999.

Sources close to the committee said that one of the recommendations is to gradually turn US-64 into a debt-oriented scheme. Currently, around 65 per cent of US-64's corpus is invested in equity assets.

Parekh did not rule out more meetings of the committee with the UTI management.

Meanwhile, Subramanyam said the UTI would float the $ 500 million Millennium Bond in the overseas market, only when the market conditions are favourable.

''We would raise the amount when the market is ripe,'' he said.

The UTI is floating the bond issue to fund infrastructure projects in the country. Infrastructure, particularly the road sector, is in dire need of funds and economic sanctions after the nuclear tests have not helped matters.

Earlier, State Bank of India had mopped up $ 4.20 billion from Non Resident Indians through the Resurgent India Bonds.

UNI

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