"The government fully backs UTI as it is like the RBI (Reserve Bank of India). You can't allow RBI to fall,'' Finance Minister Yashwant Sinha told newsmen soon after his 30-minute meeting with UTI chairman P S Subramanyam.

Sinha, who returned today from his fortnight long tour of America to participate in the Commonwealth Finance Ministers' conference and the annual fund-bank meeting, met UTI chairman for the first time following the black Monday when the Sensex had crashed over 220 points last week. Sinha also met LIC chairman G Krishnamurthy, Reserve Bank representatives and officials of the finance ministry including finance secretary Vijay Kelkar to review the status and prospectus of US-64 scheme.

Declining to elaborate on the outcome of hismeeting with Subramanyam, Sinha said "there is no cause for fear. There is no need to panic" even though some people are interested to destabilise.

UTI enjoyed the full support of the finance ministry, he said adding government has instructed it (UTI) to give all necessary assistance to investors who wanted to avail of the opportunities of investment in capital market under various schemes of UTI including US-64.

The officials of the ministry, who have returned recently from the IMF-World Bank meeting in Washington, pointed out that the reserves of the UTI's US-64 scheme, contrary to the perception, had gone up. It was also emphasised that the UTI had enough reserves to service redemption without any difficulty.

It was further clarified that the US-64 was not a Net Asset Value (NAV)-linked scheme and it would be misinterpretation to say that it was being redeemed below the NAV price.

Later, in a press statement the finance ministry reaffirmed that, "they are fully behind UTI and the trust wouldcontinue to be vehicle by which investors can participate in the capital market and reap the benefits of their savings and investments."

Reacting to press reports about UTI and especially US-64 scheme, the ministry said that, "while it is a fact that performance of individual schemes and asset structures tend to change with the overall performance of the market, UTI has been able to provide a reasonable return on US-64 scheme through its operations income."

The ministry also called upon the public to avail opportunities of investment in capital market under different schemes of UTI including US-64. The press statement also added that, "the government has instructed UTI to give all necessary assistance to investors in this regard."

US-64, it was pointed out was essentially a long term investment vehicle for investors, especially small ones, and has been in existence for the last 34 years. The sale/repurchase prices of US-64 have been fixed keeping in view the need to provide an easily negotiablefinancial asset independent of short term fluctuation in value of securities.

The easily liquidity and the reasonably good return, the finance ministry press statement said, "have earned for the scheme a brand equity."

The finance ministry pointed out that the UTI was established under an Act of Parliament as a vehicle for encouraging savings and investments and as a mechanism of sharing the income, profits and gains accruing from such investments with the investors.

While UTI's flagship scheme is the open-ended US-64 through which investors can enter and exit as per their needs, UTI has also over the years introduced several schemes to meet the various investment needs of investors. All UTI schemes including US-64, the ministry statement said, have an excellent track record of providing a reasonable return to investors on their investments through its efficient capital market operations under different schemes.

US-64, it added, has been a mechanism by which retail small investors -- who accounts anoverwhelming majority of its investor base -- to participate in capital market with the opportunity of investing through the scheme in a diverse spectrum of portfolio of the best private and public sector companies, government and corporate securities and reap benefits of income flows and capital appreciation as well as risk mitigation such a holding ensures.