The impact of the government’s massive Rs 14,600 crore bailout package for UTI was visible on Monday with US-64 units zooming on the wholesale debt segment of the NSE. US-64 soared 20.16 per cent to Rs 7.15 as compared to its last traded price of Rs 5.95, thanks to the improved fortunes for the beleaguered scheme. About 1.80 lakh units worth Rs 12.88 lakh changed hands.US-64’s NAV stood at Rs 6.02 as on August 30, 2002. “The prospects for the US-64 scheme have improved. The bailout package involves a support of Rs 6,000 crore to US-64 alone. This amount is the estimated shortfall in the US-64 scheme. This means that investors will not suffer,” said a dealer.According to dealers, the bailout package announced by the government on Saturday along with the government’s promise to offer tax incentives will further boost the US-64 price in the secondary market. The government will make good the shortfall through the issue of government securities tradable in the secondary market. The finance ministry is working out the details of the bailout. As per the bailout package, investors who redeem US-64 units even after May 2003 will continue to get the administered repurchase price of Rs 12 per unit up to 5,000 units and Rs 10 per unit beyond 5,000 units. However, this facility applies only to old investors of the scheme. “In fact, reports suggest that the units of US-64 issued after January 2002, when the scheme became NAV based, would be transferred to UTI-II,” said a market source.CII president Ashok Soota, in a statement, said ‘It shows that the government is committed, not only to protect millions of small investors but also to restructure UTI along more sensible lines’.“I feel very happy that government has come up with a comprehensive scheme for UTI,” Sebi chairman G N Bajpai said.
