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Few investors opt for redemption on day one

Priya Ganapati in Bombay

Day one. Venue: SNDT building, Churchgate, Bombay.

At 3.30 pm on Wednesday afternoon, there is hardly any one at the Unit Trust of India branch office. A few women sit across the counters and glance up in anticipation whenever the door opens. It has been a dull day, they complain.

On any other day, it could have been attributed to the dull market conditions, the sluggish economy, the weather... just about anything.

But on the first day of the reopening of the purchase window for US-64 by the Unit Trust of India the lack of any activity at the UTI counters comes as a damp squib to the hype that had been created over the last few weeks.

"We have received just sixteen applications through the day," reveals a lady at one of the special counters set up by UTI to handle the redemptions.

The low numbers are reflected at other UTI counters through the city.

At the UTI counter in World Trade Center in Bombay, officials say that about 50 applications have been received while at yet another center, there have been just around 100 redemption forms submitted.

"On day one, we have got less than 300 applications across Bombay. There is absolutely no demand for redemption. All over the country, we believe less than 4,000 forms have been submitted," says B G Daga, executive director, UTI.

So, what really happened? Media reports had speculated that UTI could face redemptions of Rs 50 billion to Rs 60 billion over the next two to three months. That number seems highly exaggerated now.

UTI officials squarely lay the blame on the doors of the media.

"The media created such a hype over the issue. They are the ones who suggested and triggered the idea of a run on UTI soon after we announced the decision to freeze sale and repurchase of US-64 units. The figures coming in today show that the thought of a run on UTI is completely unfounded," says a senior UTI official.

"There is no other scheme in the country that offers the kind of returns that UTI does, month after month with assured safety. The tax-free benefits of US-64 is also a big plus point," M Damodaran, chairman of UTI had said while explaining why UTI still remains the best investment option.

The few who have walk in hesitatingly into the UTI counters seem to agree. Says a woman who subscribed to the US-64 scheme in May 1997, "UTI has the backing of the government. They are not a private organisation. They won't take the money and run away."

Counsellors dissuade hesitant investors

A large portion of the credit should also go to the effective deployment of behind the counter staff.

The staff manages to do wonderful jobs of dissuading the hesitant few who walk in, clutching their certificates, wondering if redeeming is such a good idea after all.

Ravi Prasad who had come with his redemption form filled up was counseled for nearly 15 minutes by a lady who explained to him how his investment was safe and returns assured.

"Don't redeem now. Go home, think about it for a few months. If you still feel like you want to sell it, come back. That time you will get more money than you are getting now," she says.

Prasad is convinced for he has turned back. There are many others like him who walk in just for the reassurance that all is well and their money is safe.

The staff at the counters handle all questions ranging from the suspension of UTI officials and the arrest of the P S Subramanyam, former UTI chairman to how safe is their investment, with ease.

UTI officials happy

Naturally, many who have walked in have gone back without selling their US-64 units. UTI officials are pleased.

"We had made provisions for additional counters in case there is a need. But now we have cancelled that. We don't believe that the redemptions will increase. If people were so desperate to sell they would have rushed today itself," the senior UTI official said.

UTI officials believe that the numbers will now give them and the government breathing space. For the last two days, there has been a furore in Parliament over the US-64 issue.

They said that they would get back to the government with the today's numbers and use it as a measure of the high faith that investors still have in the institution.

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