Uti: Banks Spot 12 Scrips For Collateral

Public sector banks (PSBs) have decided against taking infotech stocks, including, Infosys Technologies and Satyam Computer Services, as collateral, while extending a line of credit to Unit Trust of India (UTI).

According to top banking sources, the banks and UTI have zeroed in on a dozen scrips which would be taken as collateral. The scrips, which belong to the old economy include Reliance Industries, Hindustan Lever, Hindalco Industries, Reliance Petroleum, ITC, Hindustan Petroleum Corporation Ltd, Bharat Petroleum Corporation Ltd and Grasim Industries.

They said that banks would extend a Rs 3,000 crore line of credit against a total collateral of over Rs 5,000 crore. UTI and banks have also agreed on a 40 per cent margin to be brought upfront by the mutual fund behemoth.

Infosys Technologies and Satyam Computer Services put together account for 3.17 per cent of Unit Scheme 64's market value as on June 30, 2001 _ the close of UTI's accounting year.

The market value of UTI's holding, spread across its schemes, in Reliance Industries, Reliance Petroleum, HLL and ITC as on June 30, 2001, stood at 15.83 per cent, 6.88 per cent, 2.08 per cent and 5.74 per cent of market value, respectively. UTI's holding in Hindalco Industries was estimated at 1.30 per cent of market value at the end of June.

At a meeting to take the consent of banks for extending a line of credit last month, an option to pick up scrips from over 50 companies was given but the banks insisted on picking up only A category shares.

While insisting on cherry picking scrips from the US 64 portfolio, banks had insisted that they would not pick up any infotech share or any share which were part of the infamous K-10 scrips in which stock broker Ketan Parekh is alleged to have operated.

Around a dozen banks led by State Bank of India are extending a line of credit to UTI in wake of its July 2 board decision to put a freeze on sale and repurchase of its flagship Unit Scheme 64, which has been partially revoked.

UTI executives said that the mutual fund is not expecting any redemption pressure after repurchase commenced on August 1. In the first three days, in all US 64 units worth Rs 22.2 crore came up for redemption at the special price of Rs 10 per unit.