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US-64 support package taking shape -- 3 more banks commit Rs 850 cr to UTI

Sarbajeet K. Sen

NEW DELHI, July 30

BARELY two days before the repurchase window of Unit Trust of India (UTI) is to be reopened on August 1, the financial support package for the beleaguered mutual fund is taking firm shape, with several more banks having finalised plans to provide the pro p.

Two New-Delhi based banks, Punjab National Bank (PNB) and Oriental Bank of Commerce (OBC), and the Mumbai-based Central Bank of India (CBI) on Monday confirmed plans to extend a total line of credit of Rs 850 crore to UTI.

While CBI and OBC said they have already obtained board approval for the lines of credit of Rs 250 crore and Rs 200 crore respectively, PNB said it planned to get approval for a line of credit of about Rs 300-400 crore soon.

``I will get the necessary approval within the next 2-3 days,'' the Chairman and Managing Director, PNB, Mr S.S. Kohli, told Business Line. He said the line of credit would be available to UTI at an interest rate of 10 per cent per annum for six months.

Mr Dalbir Singh, CMD, Central Bank, confirmed that the bank would charge 10 per cent interest on the line of credit which would also be available for six months. ``This is 100-per cent safe lending,'' he said.

The Chairman and Managing Director, OBC, Mr B.D. Narang, said the Rs 200-crore line of credit cleared by the bank would be available to UTI at a similar sub-PLR rate. ``The rate of interest would be the same as decided by the SBI-led consortium,'' he sai d.

UTI has indicated to the banks that it might require support in the region of Rs 3,000 crore to meet the initial repurchase pressures. ``Once the Rs 3,000-crore is committed by the banks, there would be no need for other banks to participate in the exerc ise,'' a chairman of a bank said when asked how many banks were expected to extend support to the Trust.

Several banks, besides State Bank of India (SBI), have already expressed their willingness to stand by UTI over the coming months. While SBI has provided a Rs 1,500-crore line of credit, Union Bank of India has pooled in Rs 500 crore while Bank of Baroda has announced that it has approved a Rs 300-crore facility.