The government has allowed Unit Trust of India-I (UTI-I) to sell securities under the Special Unit Securities scheme-99 (SUS-99) to banks and financial institutions. The institution has been given a one-time exemption to sell the pledged securities to meet the redemption pressure for US-64.
The redemption of US-64 units will have to be completed by the end of this month. The one-time exemption was required because the SUS-99, comprising equity and debt of different public sector companies, was largely pledged with some of the public sector undertaking (PSU) banks, and it was not possible for UTI-I to sell these papers to other financial institutions, unless this pledge clause was removed. However, the exemption has been limited to meeting only the expected shortfall in meeting the US-64 obligations.
UTI-I has already begun to sell the debt papers on the National Stock Exchange, but has decided to go slow on offloading equity as that will create ripples in the market. The SUS-99 corpus of around Rs 3,300 crore was built in 1999 by hiving off a large chunk of the PSU shares. In exchange, the mutual fund got financial help to tide over its crisis.
The current sale by UTI-I is in addition to the Rs 3,000 crore provided in the Budget this year as cash support to meet the redemption pressure on US-64 and other assured returns schemes.
