Defending his decision to retain the 20 per cent dividend despite erosion in the NAV during his tenure, from January 1, 1997 to June 30, 1998, Gupta said that there was nothing wrong from any point of view in taking such a decision.

"The erosion in the scheme was sudden, temporary and would not have been a sufficient reason for not declaring a 20 per cent dividend," he said, adding that "it had helped in improving market sentiments and any that other decision would have been counter productive".

"The scheme had earned more than Rs 3,500 crore by the end of April this year, and the UTI was duty-bound to award the profit as dividend to its investors," Gupta said.

"The trust was aware of the erosion in the net asset value and expected anearly turnaround in market sentiment for a recovery of the NAV," the former UTI chief said. He was confident that the trust could make up the loss on account of the scheme provided the market sentiment improved.

Of the three elements which contribute returns on the US-64 corpus, the interest on funds deployed and dividend on equity investments will continue to be good and capital growth will also move up with an improvement in the market, he said.

"There is no reason to restructure the well-balanced portfolio of US-64. The scheme's return cannot be pre-determined as it is purely market-driven. Any support from the centre is welcome but not necessary to make up for the present losses," Gupta said in an interview on Tuesday.

"I do not see any reason for this hue and cry over a redemption worth few hundred crores (of rupees) when the trust has had overcome much larger redemption pressures in the past," he said.

On IDBI's decision to redeem Rs 200 crore worth of US-64 units, Gupta said the institutionhad deployed its surplus funds in the scheme in June and redeemed it to meet disbursals to corporates as return on loans were higher than that of the US-64. "This is not a new practice and will be adopted in future also," he said.

On possible ways for UTI to generate liquidity, Gupta said UTI could float a scheme where cash-surplus banks and institutions will buy units. Asked if a line of credit would be necessary in case redemptions peaked, Gupta said, "I don't think it will be necessary or the need for it will arise."

According to Gupta, UTI cannot borrow funds, but the line of credit could be through selling of gilts to the Reserve Bank or IDBI.

Gupta also said that the computation of NAV cannot be changed at this juncture as it would affect the earlier investors. The rationale of the scheme is to provide stable returns and any change will affect its very structure, he said.