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July 13, 2001
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Money > Business Headlines > Report July 13, 2001 |
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LIC-led consortium may come to US-64 rescueP Vaidyanathan Iyer, Sidhartha & Subhomoy Bhattacharjee The finance ministry is likely to ask a consortium of banks and financial institutions led by Life Insurance Corporation to bail out the beleaguered Unit Scheme 64. The package could be in the form of an interest-free or soft loan to UTI to be paid back over a period of 10-15 years. According to sources, the finance ministry which met the UTI top brass on Thursday has asked for a meeting of UTI with LIC, Industrial Development Bank of India and a majority of public sector banks tomorrow to thrash out the quantum of financial support needed to tide over the crisis. This meeting is besides the one called by Finance Minister Yashwant Sinha on Friday with banks and FIs to discuss their results, credit offtake, capital market exposure, non-performing assets and a move towards universal banking. Friday's meeting is expected to probe the willingness of the banks and FIs to assist US-64 bailout. It would also delve on the amount to be contributed by each of the banks and institutions. The UTI board of trustees is meeting in Bombay on Saturday, which will finalise the package including the decision to relax the freeze on sale and repurchase of US-64 units. The expert group of N A Soonawala, Y H Malegam, R H Patil and R P Chitale along with acting UTI chief K G Vassal and executive director B G Daga met Finance Minister Yashwant Sinha to decide on the exit option. "It has been decided that the repurchase price of UTI in the exit option being worked out will not be below the face value (Rs 10 per unit)," a top finance ministry official said. The number of units which the small investor will be allowed to redeem in the exit option to be announced by the weekend will aid in quantifying the bail-out package which is expected to be in the Rs 30 billion to Rs 35 billion range, sources said. "The number of units allowed to be redeemed by the small investor could be in the range of 1,000 to 2,000 units," sources said. According to the Companies Act, a small investor is defined as one holding securities of value not exceeding Rs 20,000. Vassal, after a three-hour long discussion with finance ministry officials told mediapersons, "We will announce the package shortly." He, however, refused to talk about the specifics of today's discussions with the finance minister. Apart from Vassal and Daga, the other executive directors D S R Murthy, S K Basu and M M Kapur were not involved in the discussions with Sinha and finance secretary Ajit Kumar. Powered by YOU MAY ALSO WANT TO READ:
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