MUMBAI, OCT 13: The former chairman of Unit Trust of India and the current chairman of IDBI, G P Gupta, today said that the Unit Scheme-64 continues to be a ``sound scheme'' and IDBI, if necessary, will not hesitate to park its short-term funds in the scheme. The former UTI chief also defended the trust's proposal to declare 20 per cent dividend and IDBI's move to redeem units worth Rs 200 crore.``There is no cause for worry for the investors in the US-64 scheme. This is not the first time when US-64 is facing redemption. We are confident that US-64 will be able to tide over the current crisis,'' said Gupta, who just returned from a World Bank-IMF meeting in Washington.Defending the IDBI move to redeem US-64 worth Rs 200 crore in September, he said, ``even in July (after US-64 corpus had declined), the IDBI had parked about Rs 200 crore with the scheme for liquidity and short-term gains and decided to withdraw it in September as we had to disburse funds to industry.''``We withdrew from US-64 due tocommercial reasons. We are getting a return of 16 per cent by deploying funds for long term with the industry. In comparison, US-64's returns are for short term at the interest rate of 11 per cent,'' Gupta said, adding, ``In future, IDBI will invest in US-64 as it is the best instrument available for safety, liquidity and returns.''``The investors have not been explained properly about the scheme's erosion. Till April-end, we were having a massive surplus. But it was only in May-June, that the stock markets fell, and the US-64's corpus declined,'' he said.Gupta, who became the IDBI chairman two months ago, also strongly defended the decision of the trust under his stewardship to opt for a 20 per cent dividend for Unit-64 scheme for the year 1997-98. ``The erosion in the scheme was sudden, temporary and would not have been a sufficient reason for not declaring a 20 per cent dividend.'' Gupta said.``The trustees decided that if UTI declares a lower dividend on the scheme, there would be further fall ofstock markets which were reeling under the South-east Asian crisis. Hence, in the larger interest of Indian stock markets, UTI had maintained its 20 per cent dividend,'' he said. Gupta was the chairman of UTI when the US-64 suffered a negative balance of Rs 1098 crore. ``The present fall in the stock market is due to some foreign institutional investors (FIIs) taking advantage of UTI's vulnerable position.'' he added.``I do not see any reason for this hue and cry over a redemption of few hundred crores for a Rs 20,000 crore fund. The trust has successfully tide over much larger redemption in the past,'' Gupta said.The investors' perception overseas has changed drastically since the nuke explosions in May. ``The investors have realised that the nuke bombs and the US sanctions did not had any adverse effect on the Indian economy. We expect both the economy and the stock markets to pick up from November onwards.''``As per our (IDBI's) data, industrial activity has picked up in the current fiscal. Eventhe disbursements and sanctions of the IDBI has shown a healthy growth in the first half of current fiscal as compared to the same period of last year. Based on this data, we are positive that the economy is in the right tracks and markets will pick up soon,'' the IDBI chairman said.
