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Despite US-64 fiasco -- People continue to prefer Govt schemes

Ambarish Mukherjee

NEW DELHI, July 4

WITH the US-64 fiasco looming large over the country's financial spectrum, and a general feeling of being cheated, the common man feels that even now it is better to repose faith with the Government as far as your hard-earned money is concerned because o thers are far worse.

And what is also interesting is the fact that the US-64 debacle has created an urge in ordinary investors to learn about investment opportunities and their stability and liquidity.

Because, said Mr O.P. Khanna, a senior official in a Delhi-based private sector company, there is always a sort of sovereign guarantee as UTI had been created by an Act of Parliament and the Government cannot just allow it to go haywire. His family had m ade invested some money in the US-64 scheme. ``By and large, we had put around 20 per cent of our investments here. I am not saying that I will lose my money but certainly I'll think twice before trusting UTI again though I'll certainly keep my money wi th Government-owned institutions only.''

But his confidence has been shaken seriously. ``Just sometime back I saw an interview of G.G. Vaidya, former chairman of State Bank of India, on TV. He said that big corporate houses had prior information that this was going to happen and had sold their units. I fail to make out whether there will be an enquiry to find out if this is true. If it is found that the big investors have sold their units during the few weeks before the announcement, definitely there is an unholy alliance between the UTI and t hese companies. Will the key officials be punished?''

Mrs Renu Sharma is a teacher in a Delhi Government school. Her husband being the Managing Director of a leading non-banking financial company, she had left all investment decisions to him. But during the past two days, she herself is taking interest and has found out that there are, indeed, many more opportunities.

``I had some investments in US-64 made in 1997 and luckily I had withdrawn a part of it last year after the earlier trouble when the Government came forward with a bail-out package. I also did not have any plan to sell them within the next six months but I will not buy units ever again,'' she said.

She has a lot of ideas and feels that there are a lot of opportunities which are as safe as the UTI or may be even better.

Traditionally, UTI investments were considered as stable and liquid as bank fixed deposits or gold. ``The tax-free RBI bonds could be better,'' she feels.

In fact, there seems to be a preference for RBI bonds and Post Office savings schemes as far as fixed deposits are concerned and National Savings Organisation's pension schemes for those who invest on a regular basis. Earlier, US-64 met the needs of both types of investors.

Mr Kuntal Sensharma, a senior official with the Central Government, said that as a salaried person his investments are in both types of instruments. He makes some monthly investments and some investments are on a yearly basis. He will now divert more mon ey to the PPF scheme which gives a decent return on a 15-year term. Besides, one can also avail of loans after four years and can make withdrawals from the sixth year. He too prefers the Post Office schemes.

Mr P. Chakraborty, an accountant with a public sector bank who has taken VRS and now acts as an investment consultant, asks: ``Why should US-64 be the only place to park your hard-earned money. One can open a recurring deposit with a bank. Continue it fo r an year and then invest the proceeds in tax-free RBI bonds because now bank deposits above Rs 5,000 too attract TDS (tax deduction at source) while the RBI bond is tax free. They also offer liquidity which nobody else offers. One can also keep money in the Post Office schemes where there is a 10 per cent escalation in capital apart from interest earnings for a five-year loyalty. You can also withdraw after a year in case of emergency. And none of these institutions will play in the stock market with y our money.''

Pic.: Investors, who had come to make enquiries on the US-64 scheme, coming out of the UTI office in Mumbai.

Picture by Paul Noronha