Tata Asset Management Ltd managing director K N Atmaramani who made a presentation on the fund to press persons here on Wednesday said he has also sought a tie-up with the bank for faster transfer of funds from Mumbai to the southern states within 24 hours so that investors are assured of quick banking and cash management facilities and have high liquidity.

The reason for the proposed tie-up with Bank of Madura, he said, was that the bank has set up a special department for mutual funds marketing. Selling the concept of mutual funds to investors is specialised task and the bank is geared to this whereas other banks have not set up such specialised cells.

According to him the Tata Gilt Fund has so far collected Rs 65 crore in less than a month since its launch. Entire proceeds will be invested in government securitieswhich have zero risk for investors.

The fund also offers tax-free dividend option to investors thus offering double benefit of zero risk and zero tax on dividend income. Atmaramani said as a policy Tatas have decided to go for open-ended mutual funds. The Gilt Fund also offers the investors option to enter or exit any time besides offering high safety and reasonable return.

Atmaramani said after the Government notification allowing provident funds to invest in Gilt Funds of the mutual funds industry, the sector holds big attraction for investors. Tax-free dividend is being offered by the fund on a quarterly or half-yearly basis and the cumulative option gives long-term capital gains benefit.

The investor has two options with the Gilt Fund viz regular dividend option and appreciation option each has its own NAV (net asset value). The investor can also avail of the tax advantages under section 54EA/EB. The fund will invest in Central and state government securities of varying period and yield.

Tatamutual funds, he said, would be investing in short-term securities as he expects interest rates in the next two or three months to come down. He attributed three reasons for his view: RBI is reworking the cash reserve ratio and interest rates, the new government will have to borrow money and lately industrial production has improved. But he expects interest rates to firm up after March 2,000 once the demand-supply cycle picks up and impacts on the interest rates.