Instead of being on the defensive, UTI, in fact, said in the presentation that it may hike the repurchase price to between Rs 14.90 and Rs 15, which would mean an additional appreciation of between 2.4 per cent and 3 per cent higher than the acquisition price of Rs 14.55.

In a parallel development, finance secretary Vijay Kelkar on Wednesday hammered together a contingency rescue plan with the heads of the Industrial Development Bank of India (IDBI), Life Insurance Corporation (LIC), General Insurance Corporation (GIC) and UTI. The three institutions have been told in no uncertain terms to provide "unconditional support" to UTI. They institutions have also been told toensure that net subscriptions to the US-64 scheme should be maintained at `normal levels'. This is being interpreted to mean that any large-scale redemptions would be made good by the trio.

Highly-placed finance ministry officials, however, have expressed confidence that this contingency plan may not be required to be put into action because of the unprecedented support extended by public-sector banks to the US-64 scheme.

In another move, the Reserve Bank of India (RBI) has offered "unlimited cash" to the trust, finance ministry officials say. "This will be done by unloading government securities by the central bank," a ministry official said. He was quick to point out that this exercise would not have any impact on the central exchequer as it was a "non-budgetary exercise" between the RBI and UTI. No rate of interest on the cash advance to UTI has been fixed as yet, but it will be somewhat in relation to the cost of funds incurred by the RBI.

Ministry officials hinted that a low rate of interest onlikely cash advances by the RBI may also be considered in case UTI faces difficulties in the days ahead. In this case, it is not clear who will finance the interest differential.

The UTI presentation maintained that the annualised return given by US-64, at 18.3 to 19.4 per cent, was substantially more attractive than returns elicited by banks in other so-called attractive debt instruments.

Sources said that Bank of Baroda's K Kannan announced a subscription of Rs 100 crore. Similar pronouncements were made by the Union Bank's TA Pannir Selvam, Punjab National Bank's Rashid Jilani and the chiefs of other banks, including the State Bank of India.

Kelkar against UTI recast

The Securities & Exchange Board of India (SEBI) chairman DR Mehta met finance secretary Vijay Kelkar and discussed the crisis surrounding the US-64.

Mehta gave a synopsis of the issues raised by SEBI regarding the schemes managed by UTI and the demands made, time and again, by the regulatory body to bring about moretransparency in the functioning of US-64.

Sources say Kelkar has expressed his disinclination regarding restructuring of UTI or any of its schemes at this juncture. He advocated that the dust should settle down before the issues are looked into in earnest.

SEBI had consistently demanded that the UTI schemes should be governed by the same set of laws that apply to other mutual funds. After protracted negotiations, former finance secretary Montek Singh Ahluwalia had worked out a complex regulatory mechanism for UTI schemes. Clearly, this format has been found not to be very effective. What is more, US-64 was left out of the SEBI ambit.

Options, including scraping of the UTI act--which will bring all the trust's schemes under SEBI's regulatory powers--or bringing about amendments in the act to ensure greater transparency will feature in the finance minsitry's scheme of things to be considered at a later date, sources said.