M A I N   N E W S

US-64 investors to get option

New Delhi, March 13
The government will offer to buy back the units of Unit Trust of India’s flagship scheme US-64 in cash or give the investors an option to convert them into five-year tax-free bonds bearing an interest rate of 6.75 per cent from May this year.

The bailout package for country’s largest mutual fund will be to the tune of Rs 10,594 crore, Finance Secretary S. Narayan said briefing reporters here.

According to the scheme worked out by the Finance Ministry, investors would have the option of exchanging US-64 units with government guaranteed five-year bonds bearing a tax-free interest rate of 6.75 per cent with a face value of Rs 100 each, Mr Narayan said.

In case of odd lots of units worth less than Rs 100, the unit holders would be paid the amount in cash, Joint Secretary U.K. Sinha, said.

For corporate investors falling in the 35 per cent tax bracket, the bonds would give an effective return of 10.52 per cent while it would be 10.07 per cent for high networth individuals.

Small investors paying taxes at the rate of 10 per cent, the yield from the bonds come to 7.5 per cent.

The cash option is that all investors holding upto 5,000 units since June, 2001 would be redeemed at Rs 11.80 a unit in March or Rs 12 a unit in May.

Investors holding more than 5,000 units would get Rs 10 per unit for additional units in May.

Those investors, who do not opt for the cash option, would be offered bonds by default. They can, however, encash it before May 31. PTI